2018, year of consolidation of the real estate market in Spain

The year 2018 will be even better than 2017 for the real estate market in Spain both for sale and for rent... with the exception undoubtedly of Catalonia. But what the Catalans lose will be won (or mostly recovered) by Madrid and the big cities on the Mediterranean coast.

There is still a month to finish 2017, which after 2016 proved to be another year of strong growth in the real estate market for sale as well as for rent, in all sectors, retail, office and residential.

In 2017, residential real estate benefited from:

• the consolidation of very high growth in Spain (+3.1% in 2017 to 3.2% in 2016) which favors domestic consumption and investments
• interest rates that remain historically low for Spain
• Real estate prices are still low in most regions of Spain compared to other countries, especially outside Madrid, Barcelona and the Balearics
• strong demand and strong growth in investments from professionals and individuals, especially foreign investors (+13%)
• a 10% increase in tourist numbers generating strong demand for vacation rentals

But the end of 2017 will remain marked above all by the very serious institutional crisis in Catalonia. The illegal referendum of October 1, then the unilateral declaration of independence followed by the takeover of Catalan institutions by the Spanish government frightened investors who either abandoned or postponed their real estate projects in Catalonia. This crisis had a significant impact on the Catalan real estate economy, which remained completely at a standstill in the fourth quarter of 2017. In the residential sector, sales prices even fell in Catalonia, and in particular in Barcelona, reversing the trend of a sharp rise in prices until summer (+20% in annual variation). Today, it is the buyers who set the prices in Barcelona and no longer the sellers.

So what will happen in 2018 in the field of residential real estate in Spain?

Outside of Catalonia, Everything is looking good for Spain in 2018 : the confidence of Spanish households is at its highest in a decade, foreign and national investors (individuals, funds and Socimis) confirm their desire to continue to acquire real estate or to make real estate investments in Spain, growth forecasts are still excellent among the best in Europe (at +2.5%) and this despite the Catalan crisis, prices are still at a level below what they were 10 years ago for the most part of Spanish territory (note, this is no longer the case for Balearic Islands), tourist activity should still be at a good pace after 2 exceptional years of double-digit growth thanks to the massive influx of European tourists, interest rates will remain low (even if we can expect a slight increase in rates of at most 0.5% over the year), etc.

Geographically, demand will still be very high and therefore prices will be higher in Madrid (+10%), Valencia (+10%), Malaga (+10%), Bilbao (+5%), Cadiz (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), Alicante (+5%), the Canaries (+10%), and... the Balearics (+15%). On the other hand, as long as the Catalan political situation is not clarified, demand will remain sluggish in Catalonia and real estate prices should naturally decrease in the first quarter, especially in Barcelona (-10%). This unfavorable situation in Barcelona will benefit Madrid, and the cities of the Mediterranean coast, and Valencia and Malaga in particular, which will recover a large part of Barcelona's potential foreign clientele.

Our assumptions for Spanish residential real estate in 2018:

• Increase in sales and rental prices by 5 to 15% depending on the area, the largest increases were in renovated apartments in central Madrid and especially in Palma de Mallorca, and the lowest in rural areas in the interior
• Decrease in sales and rental prices in Catalonia, and in particular in Barcelona as long as the local political situation is not clear; in the event of a new desire for independence, one can even consider a sudden drop in retail prices
• Les Luxury real estate prices (real estate worth over €1 million) in Madrid, but also in Valencia and Malaga, will increase by more than 15% driven by foreign demand
• 20% increase in the number of real estate transactions to 600,000 units
• The Real estate boom will continue to expand to areas other than big cities or islands
• La real estate construction Tourism will continue On the rise
• Spanish banks will facilitate access to mortgages

Note: on the professional market, two sectors will grow very strongly, university residences and shared office buildings.

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Source: espagnimmobilier.wordpress.com