Real Estate Market in Spain: a good time to buy a property?

Investing in a house in the COVID-19 season

The coronavirus health crisis that began in 2020, coupled with a major economic crisis, has had numerous consequences. This creates a rather uncertain scenario and concerns for the immediate future. This is also true for the real estate market in Spain. We are going to try to give you an overview of the situation of the Spanish real estate market. And above all, we will try to answer the big question that many people are asking themselves: is it a good time to buy a property?

Avoiding risks and surprises with the house you want to buy

During 2020 and the whole of 2021 the economic situation is quite uncertain. We review the elements that influence the current real estate market situation: 

Economic crisis

The economic crisis has affected many families due to unemployment, redundancies, etc. The future is also quite uncertain, especially for sectors that have been most affected, such as the tourism sector or the hotel and catering industry. This has meant that many families are finding it difficult to meet their mortgage payments. The solution for some of these families is to try to sell their homes before the situation becomes much more serious. 

It has also led to fewer households being able to buy homes, with the result that house sales have stagnated in the second half of 2020. 

Moreover, the fact that it is a crisis caused by a health situation does not offer many alternatives to this situation until the health crisis is stabilised. Only if this is achieved can consumption, tourism, etc. be revived. Experts point out that this crisis has been very deep, but could be short-lived if the situation is restored soon. The impact of the Covid vaccination system could improve the situation. 

Need to sell homes

The aforementioned need to sell houses has led to a moderation and fall in house prices. If the situation continues over time, this trend could become more pronounced. 

Inherited housing

Deaths in Spain rose sharply in 2020 due to the coronavirus. A terrible situation that has left thousands of families devastated. A consequence of this is the increase in the number of inherited homes. Many of these houses that have been transferred by inheritance will be sold. This has led to an increase in the volume of houses for sale. A situation that has a direct impact on housing prices: the greater the supply, the lower the prices. 

Low interest rates

Since most of the time mortgage financing is needed to buy a property, it is important to keep an eye on interest rates. At present, interest rates are low and this favours the buyer. The Euribor, for example, the most used index in mortgage loans, closed 2020 at 0.5% in negative, something historic. 

So is it a good time to buy a house?

So is it a good time to buy a house? Our answer is: it depends. It depends on your personal situation, that goes without saying. Above all, it depends on your current and future financial situation. 

From the point of view of house prices, it is certainly a good time. The result is that there is a greater supply of houses for sale for the reasons we have explained. This has an impact on a general drop in the selling price. It also increases the availability of homes that adapt to what you are looking for and what you need, the location where you would like to have your new home, etc. 

Also keep in mind that this situation can be accentuated but recover in a short period of time. When the economic crisis starts to disappear the price of housing will recover again. So this could be the right time to buy your new home. 

And obviously buying now depends on your personal economic and employment situation. If your employment situation is stable, it is certainly better than now to make the investment of buying a new house in the near future. 

If you do not take advantage of this situation, such an opportunity may not arise in the next few years. 

But we insist, it all depends on the economic and employment stability you have. 

Exceptional time to buy a home

It is undoubtedly an exceptional moment in which good opportunities can be found to buy a house. The fact that a large number of people need to sell their homes as a matter of urgency has a knock-on effect on the price drop. 

If you are able to look for good opportunities nowadays it is easier to find them. 

It is also true that these opportunities will be seen more frequently in second-hand or used homes than in new homes. 

The reason is obvious: it is families who have the greatest need to sell for the reasons we have already explained. In the case of construction companies and property developers of new housing, it is more common for them to wait for the property market to recover before putting their flats up for sale. They do not have the urgency of families to sell quickly. 

Buy the right home

Another recommendation we can make is that you take advantage of the moment not only to buy your new home for little money. Take advantage of the moment to buy the home that will really meet your needs. 

What are we talking about? The months of confinement that we have been living in and especially the hardest months of the state of alarm in Spain have made many people discover how limited their current housing is. 

Imagine families who lived in houses without exteriors, terraces or gardens. They must not have had a very good time compared to families with large, spacious houses and outdoor grounds. The two confinements must have been very different for each of them. 

So now is the time to think about the house you want and look for it. Take advantage of the moment to buy it at a lower price than usual. Surely the house of your dreams is more affordable today than at any other time. 

And before making any purchase, please check whether the house has any encumbrances.

Another very important point is the legal aspects of a house. -> Find out all the details

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