Are you wondering what the future holds for the Spanish housing market? Or which areas you should be investing your time and money in? Well, we have plenty of data that we can rely on to help us look for purchasing patterns. We use these to review what’s been happening over the past quarter and in the last year. And that helps us give our agents some insight into the direction the market is going, and the kind of decisions today’s buyers are making.
Spain has just had another General Election in which the parties on the right gained some ground and in which the PSOE and Podemos parties finally agreed to join in a minority coalition. The UK is preparing for a General Election in December where a Conservative victory is the most likely outcome but a hung parliament and a Lib-Lab-SNP coalition is also a very real possibility.
The signs are bright
Both the latest year on year figures and the quarterly trends show that there has been an increase in house prices in Spain. This indicates a continuing positive trend and optimistic signs for the future of the market. In fact, the median asking price in Q3 2019 is a very healthy €270,000.
What’s happening in the provinces?
When we look at the state of the market in the provinces, we can see that Cadiz has been doing exceptionally well. House prices have increased in this most southerly of regions by 5.7% in the last three months and an impressive 23% over the last year. This is by far the highest growth that any of the regions have seen. In second place is Tarragona with growth of 1.7% this quarter (0.7% annual growth), while Alicante’s house prices are up by 1.6% the last three months (up by 5.9% over the last year). Next comes Granada, showing 7.8% annual growth and a 1.6% growth during the last quarter. And, perhaps unsurprisingly, given the fact we’ve repeatedly reported on the popularity of Mallorca, the island’s house prices are also up by 1.5% this quarter (and a reasonable 10.1% over the last year).
Looking a little closer
It’s when we drill down into the specific locations within the regions that things start to get interesting. The top performing micro location is the village of Dehesa De Campoamor in Alicante, showing growth of 26.6%, followed by San Juan, also in Alicante, which is showing a 19.9% growth. A little way behind are Sol De Mallorca in Mallorca, and Campoamor in Alicante at 6.3% and 5.8%, respectively. At the other end of the scale the city of Madrid has seen prices fall by 9.2% in the last three months, with Cumbre Del Sol to the north of Alicante city (-5.6%) and Andratx in Mallorca close behind at -3.6%.
What does this mean?
It’s impossible not to notice that the provinces that have shown the strongest growth also contain some locations that have seen prices decreasing. This underlines the difficulty of relying on house pricing statistics over the short term; when there are only few properties available for sale in an area, average prices can become skewed. It is perhaps better then to concentrate on data at a macro level, whether that’s by looking at the provinces as a whole or by looking at the year on year figures. This will help to give more of an accurate picture of what’s going on in the market.
Political uncertainty in the Spain and the UK
Political uncertainty in both countries is likely to have an impact on the Spanish property market for 2019. The policies of the newly formed Spanish government will either help to improve the Spanish property market or will be the cause of further uncertainty. With a PSOE / Podemos coalition, it looks like the left may seek to intervene in the Spanish housing market in order to control rents and decrease property rights for landlords.
And with British demand for Spanish property having been the strongest among international investors in areas such as Andalusia (Malaga / Costa del Sol), the Community of Valencia (Alicante / Costa Blanca), Murcia (Costa Calida), the Balearics and the Canaries, a fall in demand from UK buyers will be felt immediately, as it was just after the Brexit referendum in 2016, when UK demand fell for two consecutive quarters.
The British buy property in Spain as a retirement or second home and demand is usually up and down depending on the strength of Sterling and confidence or lack of in the strength of the British economy.
With a General Election looming in the UK, it would appear from the increase in the value of Sterling against the Euro that the bets are on for a Conservative Government which would mean “getting Brexit done” and the implementation of a deal which was agreed by Theresa May and subsequently tweaked (or twerked) by Boris Johnson. The increase in value of Sterling against the Euro is the best scenario for maintaining British demand for Spanish property.
A General Election result which weakens Sterling and, as a result, reduces British wealth will likely result in a decline in British demand for Spanish property. This may occur if there is a coalition in the UK between left parties. Furthermore, it is likely to result in further uncertainty as it may lead to more confusion and referendums on Scotland and Europe.
