How will the temporary “pause” affect the real estate market in Spain?”
Let’s be clear about the situation. At the moment there is not a market downturn, but exactly a pause – a suspension of all operations. Both in real estate and in all related industries: banking, construction, legal support of transactions, etc. Of course, in the near future we will see some decline in economic indicators in the economy as a whole. And this will entail some decline in prices and purchasing power, but expectations should be reasonable. If we are talking about the secondary real estate market, why will there not be a sharp drop in prices? It’s quite simple. Some property owners will make discounts on their properties, this is a fact. But, do not expect that many will do so and these discounts will be huge, and this will create a general “weather” in the market.
Long-term leases
Many owners will simply suspend sales and try to move into a related industry: rentals. The demand for long-term rentals throughout Spain, and in the province of Alicante in particular, is very strong. The conditions for renting have only gotten tougher until recently. The government has been introducing new regulations, and prices have been rising year on year. Plus, this sector will not become smaller – the borders are closed and potential clients will remain in the country. There is another very significant factor: currency fluctuations. For example, a fairly sharp fall in the Russian ruble will convince many property owners who receive their main income in rubles to leave their investments in a more secure form and receive a side income from renting in a more stable currency – the euro. All this means that there will be more rental offers. Requirements will soften, demand will be satisfied and there will be more satisfied consumers and sellers in the sector. All this will reduce the overall tension in the market. And this pause will be enough to stabilize the sales sector.
What about the primary real estate – much here will depend on state policy and banks, which will directly affect the mood of private investors and real estate developers. It is too early to make predictions. However, the general democratization of banking requirements is a good sign. The government is also likely to respond positively to mitigate the effects of the coming crisis in this large and important sector of the economy as much as possible. Therefore, investing in real estate has always been, is and will remain an excellent investment.
With respect, wishes for health and peace,
Anna Lioubavina and the team of Broadway Consulting Corporation SL.