If you have already invested in a luxury house in Marbella or a considering selling or buying property on the Coast, you’ll want to know how the property market performed in 2022. And even more importantly, the forecast for 2023.
To give you an overview, we bring you the highlights of the various authorities on the Spanish property market; INE, Tinsa and the takeaway points from BankInter’s Strategy Report, and provide links for further reading.
One thing that all real estate agents across the Costa del Sol will agree on, is that 2022 has been an extremely busy year! Recent geo-political events have impacted every corner of the world resulting in Europe-wide inflation and rises in interest rates by the ECB. Throughout the first seven months of 2022, the markets saw record sales and price increases, culminating in rush to buy during the summer before further interest hike
Return to pre-Covid transaction levels
The trying global economic conditions will continue to have a knock-on effect on the demand for property throughout Europe. However, the impact on the Spanish property market is not expected to be as severe as in other Eurozone markets. The forecast for growth in the Spanish property market in 2023 is that it should return to the pre-covid levels, averaging around 563,450 annual transactions.
Property prices throughout Spain have consistently risen over the last two years, experiencing unprecedented increases not seen since 2007. Atlas Real Estate Analytics reported a 2% increase in the number of property transactions in 2022 (665,754), compared to the same period in the previous year (650,9139).
The Spanish National Institute for Statistics (INE) pegs the year-on-year property price increase in Spain at 8% throughout 2022. This figure has been attributed largely to inflation and is expected to normalise during 2023, as the market settles down.
BankInter’s Analysis and Markets Investment Strategy Report also estimate moderate property price rises in 2023, possibly by around 1%. This represents a slowdown as compared to the post pandemic recovery period in 2021. Another indicator of the market is the average percentage of disposable income allocated to mortgage repayments, which was around 33% in Q4 of 2022. In 2023, it is expected to rise just a couple of points to reach the historical average of 35%.
National demand and supply
BankInter’s report estimates that there is a structural demand for approximately 100,000 new homes per annum, of 70% are domestic buyers and 30% foreign investors. Nationally, the supply of new housing units was on par with the demand, with 100,000 under construction by Q4 of 2021. The figures for 2022 and the forecast for 2023 are expected to exceed this in order to address a deficit that developed over the last few years. The report concludes that after a 15-year high experienced in 2022, there could be a fall of around 5% in 2023.
Malaga Province housing prices
The Tinsa Local Markets Index (the authority on property valuations throughout Spain and Europe) has reported the price of Property in Malaga Province (including luxury property for sale on the Costa del Sol) as reaching a 7.8% year-on-year increase in third quarter of 2022. Whereas throughout Andalucia, the year-on-year growth in the same period was slightly lower at 6.6%. The average prices during this quarter reached 1,908€ m² and 1, 417€ m² respectively in these regions.
Consistent high demand for Marbella luxury villas
When considering the figures mentioned above, it’s important to note that they relate to the Spanish property market as a whole, which is very different to the Costa del Sol luxury real estate market, which constantly experiences more demand than supply. The imbalance between supply and demand is growing larger on the Costa del Sol, due to the scarcity of prime plots and also the increase in the price of building materials (due to global conditions).
The demand for all types of property in this corner of the world is much more resilient and will remain robust, as buyers are increasingly prioritising lifestyle since the pandemic.
Figures provided by the Ministerio de Formento suggest that property sales in Benahavís, Estepona and Marbella (often dubbed the Golden Triangle) in 2022 reached heights not seen since 2007. This includes the exclusive enclave of La Zagaleta.
The number of overseas buyers in Spain reached 13.17% in Q1 of 2022 (Ministerio de Formento), with Belgian’s accounting for 33.7%, Norway 31.82% and Dutch 24.19%. In Andalucia, international buyers make up 11.48% of all sales, however, it is important to understand that this covers the entire region and the percentage is much higher in coastal regions.
The British make up 16.7%, closely followed by Swedish buyers who account for 10.28% of all sales in the region. Similarly in Malaga Province, the nationalities that buy the most properties are British, Swedish and Belgium.
The imminent introduction of Digital Nomad Visas in Spain is expected to have an impact on the number of foreign investors. The DNV provides foreign nationals with a wide range of benefits including special tax perks and the option of working remotely whilst residing in Spain for 5 years.
In summary, the prognosis is positive. Although there are various predictions of price drops during 2023, ranging between 1% to 3% depending upon the reports, there effect will be minimal on one of Spain’s most buoyant property markets.