Since the crash of 2008, the recovery of the Spanish property market has been marked by the gap between the international and local markets. Regardless of how awful the Spanish economy was, foreign customers were mostly unaffected. As it turned out, the international property market began to revive in 2012, but the local market was remained in decline until 2015. In most of the places where the bulk of foreign purchasers travel, we can still observe that component of the entire market.
However, in Barcelona and other large Spanish cities, this is not the case. The domestic market dominates, with just a minor portion coming from outside the country. In places where the foreign sector may account for as much as 50% of the total market, factors such as growing unemployment and declining GDP have less of an influence on the real estate market.
Catalonia’s property market is dominated by foreign purchasers, who account for around 18 percent of the market in normal times. There were a total of 7,830 international purchasers in the Covid-19 impacted market in the first half of 2021, a 2% decrease from the first half of 2018. The province of Barcelona, however, is by far the most important element of Catalua’s real estate industry. There were 67 percent of all property sales in Barcelona province in 2021, and 24.7 percent of all acquisitions in the region came from Barcelona city itself. There was an 11.8 percent foreign market share in the province, which was much lower than the national average of 15.4 percent. There are no official statistics for the city, but our experience shows that about 10% of the population is from outside the country.
A look at Barcelona in 2021
Despite the gloom and doom that surrounded the real estate market at the beginning of the year, it turned out to be extremely robust. Total transactions have surpassed those of the entire year of 2020 by the conclusion of the third quarter of 2021. The national total is projected to reach 520,000 in Q4 and be less than 10% below the previous year’s total. We saw this pattern at the regional level as well, and we estimate that the overall number of transactions in Barcelona Province in 2021 will be about 61,000, which would place the 2021 total 2.5% higher than the 2019 total.
It was the second year in a row that Barcelona house prices had fallen. Per square metre, prices fell by -2.7 percent in 2019. As a result, it was clear that the pandemic would lead to a long period of declines in the economy. The housing market in Barcelona, on the other hand, appears to be faring better than projected.
The Changes in Costs
The average resale property price in Barcelona city by the end of 2021 was €3,952 per square metre, the same as it was in 2004. There has been a 25.3 percent drop from June 2007, when it was €5,291 per square metre.
While prices remained somewhat constant at first of pandemic, they began to fall sharply in May 2020 because to a reduction in demand. Price declines, on the other hand, slowed to a more manageable -1.4 percent throughout the course of the year at the conclusion of Q3 2021.
Variations in the price of a product can be obscured by the average price. There are five areas in Barcelona where the average price per square metre is higher than €3,952. It will be Sarria Sant Gervasi, followed by Les Sorts, Eixample, and Ciutat Vella towards the end of 2021. ( 4,019). Santa Montjuc (3,358), San Mart (3,531), Sant Andrew (3,060), Horta Gulnardó (3,026), and Nous Barris (3,028) are all below the average (2.387). Only Sarria Sant Gervasi had a 1.8 percent increase in prices per square metre in 2021.
Predictions for the year 2022
There will be a return to pre-pandemic levels of demand by year’s end in our estimation. We believe that the recovery is a result of two primary factors.
There will be an increase in demand from March 2020 to June 2021, when transactions will be virtually halted due to lockdowns and travel restrictions. Despite the fact that many individuals are still catching up, we may anticipate a more steady time after the current surge in demand has subsided. For the second time we can point out that, as previously stated, just roughly 10% of the Barcelona market is driven by foreign demand. Because of this, mortgage availability and affordability are critical. So it stands now, and we don’t expect it to alter by 2022. It is estimated that 66% of all home loans are now long-term fixed rate ones. Euribor is currently in the negative region as well.
Finally, the future of the 2022 Barcelona real estate market rests on the influence of Omicron, the likely development of undiscovered variations, and foreign travel returning to its pre-pandemic levels. Though the most recent data for 2021 is still not complete, we are certain that it shows a significantly healthier market than many projected only a year ago.
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