Roxtar Group | June 5th 2020
The First Official Spanish COVID-19 Property Market Data Is Available
Prepare for a 20 to 30% Decrease in Merchanting in 2020
By Ernesto Jonsson, Executive Director
Views from the famous five-star hotel, Puente Romano, in Marbella
The decline in the market has been extensive, according to the notaries. In March, the sales of properties were reduced by 37% and the issuing of mortgages by 28%. If we consider that the state of emergency only affected the second half of the month, these numbers predict rapidly descending trends. Registrars put the decline in operations in April at more than 38%, and as for Marbella, these numbers are a fair assumption of the current property market. Real estate experts, professionals, and economists are updating their calculations and predicting a double-digit drop in property prices based on present facts.
That said, there is a good possibility that the market begins to see positive development already this autumn if there is no repeating in new confinement measures caused by the pandemic. If the virus outbreak returns with a second wave, the collapse of sales is far from bottoming, and Marbella as well rest of Spain, will have to wait and prepare itself for a more substantial recovery period.
There are reliable indicators that 2022 will be the first year in which the global market recovers, although the full recovery of Spain and Marbella's property market could take as long as four to five years. That based upon Europe and Spain reaching a level of employment and business activity like the beginning of 2020.
Today's Rental Market and How It Will Evolve
Current data predicts that there will be many more rental operations in 2020 than in 2019. One of the most critical factors that will have the most effect on the increase in rental demand is the foreseeable drop in mortgage approvals. Therefore, banks are tightening their requirements when granting new loans for property purchases. However, this does not necessarily mean that rental prices will go up.
Still, the numbers estimate an overall decrease in rental prices of around 13% caused by less household income, increased unemployment risk, and a general decline in citizens' purchasing power. Trends are showing that people have started to change expensive rental homes for cheaper ones and that the concentration of people living in shared accommodations has increased.
In Marbella, we see a significant increase in long-term rental listings on all leading online platforms. Currently suffering from a shortage of buyers and tourists, the market appears to be urgently trying to cover lost ground from this year's adverse events. However, some property owners don't seem to be able to lower their asking prices for the time being, and we see moderate to none corrections in long-term rental rates. Therefore, it remains debatable whether the current prices will match people's budgets towards the end of 2020 and the beginning of 2021.