The Spanish property market is expected to continue to grow in 2023, albeit at a slower pace than in previous years. The average property price in Spain is expected to rise by 2.5% in 2023, after rising by 5.5% in 2022.
The main drivers of growth in the Spanish property market are expected to be:
- The continued economic recovery in Spain. The Spanish economy is expected to grow by 3.5% in 2023, which will create jobs and boost demand for housing.
- The low interest rate environment. Interest rates in Spain are currently at a record low, which makes it more affordable for people to borrow money to buy a home.
- The strong demand from foreign buyers. Foreign buyers are increasingly interested in buying property in Spain, attracted by the country’s warm climate, beautiful beaches, and affordable prices.
However, there are also some challenges that could impact the Spanish property market in 2023, such as:
- The rise in inflation. Inflation is currently on the rise in Spain, which could put pressure on household budgets and make it more difficult for people to afford to buy a home.
- The uncertainty surrounding Brexit. The uncertainty surrounding Brexit could deter some foreign buyers from investing in Spain.
- The potential for a global recession. A global recession could have a negative impact on the Spanish economy and the property market.
Here is a more detailed look at each of the factors that are expected to impact the Spanish property market in 2023:
The continued economic recovery in Spain
The Spanish economy is expected to grow by 3.5% in 2023, which will create jobs and boost demand for housing. The unemployment rate in Spain is currently at 13.3%, which is down from a peak of 26.1% in 2013. As the economy continues to recover, more people will be able to find jobs and afford to buy a home.
The low interest rate environment
Interest rates in Spain are currently at a record low, which makes it more affordable for people to borrow money to buy a home. The average interest rate on a mortgage in Spain is currently around 2.5%, which is significantly lower than the average interest rate in the United States. The low interest rates will make it easier for people to buy a home and will boost demand for housing.
The strong demand from foreign buyers
Foreign buyers are increasingly interested in buying property in Spain, attracted by the country’s warm climate, beautiful beaches, and affordable prices. In 2022, foreign buyers accounted for around 15% of all property purchases in Spain. The strong demand from foreign buyers will continue to support the Spanish property market in 2023.
The rise in inflation
Inflation is currently on the rise in Spain, which could put pressure on household budgets and make it more difficult for people to afford to buy a home. The annual inflation rate in Spain is currently at 8.3%, which is the highest level in 37 years. The rise in inflation could make it more difficult for people to save for a down payment on a home and could also lead to higher mortgage payments.
The uncertainty surrounding Brexit
The uncertainty surrounding Brexit could deter some foreign buyers from investing in Spain. The United Kingdom is one of the biggest sources of foreign investment in Spain, and the uncertainty surrounding Brexit could make it more difficult for British buyers to invest in Spain.
The potential for a global recession
A global recession could have a negative impact on the Spanish economy and the property market. A recession could lead to job losses, reducing housing demand. A recession could also lead to a decline in consumer confidence, which would also reduce demand for housing.
Overall, the Spanish property market is expected to continue to grow in 2023, albeit at a slower pace than in previous years. The main drivers of growth are the continued economic recovery in Spain, the low-interest rate environment, and the strong demand from foreign buyers.
