The opportunity to buy a beach house at a bargain price passed. The pandemic weakened the demand for second homes, but tourism and foreign investment have returned strongly and are going to inject even more pressure into coastal areas where prices are already quite stressed.
Buy a house, for example, in The Balearic Islands is reserved for very wealthy pockets. The square meter is paid in this autonomous community a 60% above the national average, and in the city of Palma de Mallorca cuesta 3.344 eurosand 72.7% more than the average for the country as a whole, according to data published by Fotocasa at the end of June. “In the Balearic Islands, prices have already exceeded those of the last bubble, they are at their highest,” says María Matos, director of the real estate portal’s study service.
Malaga, another of the areas in which foreign investment is most thriving, also shows purchase prices well above the national average, the 33,5% superiors. The cost per square meter in the capital of Malaga is the highest in Andalusia, 2.585 euros to June, according to data from Fotocasa, focused on the second-hand market.
The demand for housing by foreigners, with considerable purchasing power, is largely responsible for the prominent prices in these areas, a trend that is going to intensify, according to CaixaBank Research. “Foreign demand has recovered extraordinarily well from the shock of the pandemic. Searches on Google about buying a house in Spain suggest that this good trend will continue”, they say from the financial institution.
The price boom in Germany and the Netherlands is directing demand to Spain
At the end of the first quarter of this year, foreigners acquired in Spain more than 70,000 homes, a figure that exceeded the maximum recorded before the pandemic by more than 5,000. And the percentage of purchases made by foreigners rose to 13.2% of the total. “Foreign demand for housing is recovering vigorously after the drop it experienced in 2020,” they conclude at CaixaBank Research.
For the bank’s study service, “the path that foreign demand may have in the long term is promising if we take into account the demographic trends in Europe and that the Spanish tourism sector leads the international ranking of competitiveness”. In addition, it is added the telecommuting factorwhich has also contributed, albeit secondarily, to boosting the demand for residences among foreigners as a result of Covid-19.
All of these are factors that will favor the continuation of a sustained demand for coastal housing and thus support the increase in prices. As they recognize from Solvia, to the reactivation of tourism and the fact that Spain is one of the focuses of foreign investment in beach areas is also added “the fact that the real estate market is right now an interesting haven of profitability compared to the current economic uncertainty. Inflation rates that have begun to reach double digits – such as the 10,2% of the June data in Spain– nullify all expectations of real profitability in a volatile market year such as 2022.
On the other hand, the real estate market emerges again as an alternative for profitability in the medium and long term, in a market in which experts insist that the bubble signs of the past are not being appreciated. There is no oversupply, even to the contrary, and the financing offered by banks for the acquisition is restrained. In fact, signs of warming in other real estate markets in Europe are directing new foreign buyers to Spain.
More German demand
The recovery of home purchases by foreigners is generalized by nationality, they indicate from CaixaBank Research, but the growth is more intense among buyers from the Netherlands, Germany and Sweden, countries that currently have domestic real estate markets with clear signs of heating.
The British continue to lead the ranking in total purchases, with about 7,800 houses in the last year, but they still have not reached the level of 2019. The Germans do far exceed that level, continuing in second position and getting closer to the British.
Offers at an average price of 99,900 euros
The real estate portal Solvia has launched a summer campaign in which it puts homes on the coast or inland for sale at an average price of 99,900 euros and with an average area of 95 square meters; they are second-hand and new construction and are located in towns with more than 2,000 inhabitants. The highest prices are found in Barcelona, at 162,900 euros on average, 152,700 in Girona or 142,900 euros in the Balearic Islands. On the contrary, the cheapest second home, within Solvia’s offer, can be found in Toledo, for 70,100 euros.
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