Staff Reporter
By property expert Mark Stucklin
WITH the data in hand it looks like the Spanish housing market enjoyed a soft landing in 2023 after a remarkable mini-boom that followed in the wake of the pandemic.
There are no obvious reasons to see why the market might lurch up or down in 2024, with it more likely to track sideways at the current level.
Using data from the National Institute of Statistics (INE) for the first 11 months of last year we see that home sales for Spain as a whole came in at 550,215 transactions, down 9% compared to the same period in 2022, but 17% higher than in 2019 – the last normal year before the pandemic distorted the market.
Sales in 2023 were the second highest in more than 15 years, second only to the boom of 2022, and 24% above the 10 year average, despite headwinds like higher interest rates (up 22% in 2023), and inflation eroding purchasing power (7% on average last year, falling to 4% by year end).
It was a similar story of a return to pre-pandemic normality in areas of most interest to foreign buyers like Malaga and the Balearics, but in Alicante the sales boom continued almost unabated in 2023, fueled by strong foreign demand.
Sales in Alicante cruised towards the end of 2023 ending up 34% above 2019 and close to record highs.
Strong foreign demand contributed to the market resilience in 2023.
The number of home sales involving a foreign buyer in the first nine months of 2023 was down 6% compared to 2022 but up by 41% compared to 2019, 45% higher than the 10 year average, and the second highest on record, all according to the land registrars’ association.
Regionally, foreign sales were down 19% in Andalucia and 28% in the Balearics, but up 6% in the Valencian region.
House price evolution in 2023 was driven by firm demand and a chronic shortage of homes for sale in big cities and popular coasts.
According to the INE the average Spanish house price increased 4.5% year-on-year, to reach a level last seen in Q1 2008, in nominal terms at least (in real terms, Spanish house prices are still 25% below where they were in 2008).
In comparison, according to Eurostat, EU house prices declined an annualised 1% in Q3, 2.1% in the Euro area, and 10.2% in Germany, so Spanish house prices are holding up much better than in most other EU countries.
Regionally, house prices increased 4% in the Balearics, and 5% in Andalucia and the Valencian region.
What to expect this year? It looks like interest rates have peaked, and the Bank of Spain forecasts continued economic growth, albeit less than last year, and lower inflation than the last two years, all of which should support local demand.
On the foreign front, the 2020s baby boom retirement surge will continue to increase the number of northern Europeans thinking about retiring to the sun.
In the absence of some nasty shock, I expect the Spanish housing market to lose a bit of altitude in 2024, but nothing to write home about.
