Following a positively uplifting 2016 in which the Spanish property market saw a real turn around, what does 2017 have in store?
Despite the surprise outcome of the Brexit vote in the UK, ongoing political turmoil in Europe and the rest of the world plus a period of almost no government in Spain, Spanish property saw not only steady price rises but also, more importantly, increased numbers of home sales. Following ten consecutive quarters of growth since the property crash officially ended in Q2 2014, Spanish home transactions in 2016 were up 15% on the previous year.
Following approximately ten months with effectively no leadership, Spain has finally moved out of the political chaos and has a stable government in place with Mariano Rajoy firmly in the Prime Ministers seat.
Last year Spain saw record numbers of tourist visitors with official figures in excess of 75 million, making the country the world’s most visited. Also breaking records was the Costa del Sol with 12 million visitors, the highest ever recorded for the region and an increase of 10.2% on the previous year. The Confederation of Spanish Travel Agencies (CEAV) are predicting further record breaking figures in 2017 in excess of 80,000 visitors.
Following 3.2% growth over the last twelve months, most economists predict Spains GDP to top 3% again in 2017, in turn helping job creation and placing Spain above France and Germany in Europe’s top five countries in terms of economic performance.
Planning permission applications for new constructions increased 35% on the previous year in 2016. It stands to reason, with construction accounting for 10% of Spains GDP, as GDP grows construction will follow. Analysts forecast that close to 400,000 new homes will soon be built in Spain on an annual basis with possibly 200,000 new properties constructed in 2017. Commercial real estate firm CBRE predict more than 10 billion Euro’s of investment in offices, hotels and resorts over the coming twelve months in Spain.
With nearly a fifth of all overseas property buyers in Spain coming from the UK, the Brexit referendum and Britains surprise decision to leave the EU certainly wasn’t positive for the second home market. However the impact has not been anywhere near as damaging as initially feared, searches and enquiries for Spanish property for sale across all the larger property portals increased following the vote and Britons have continued to buy Spanish property, particularly in areas such as Andalucia and the Costa del Sol.
Whilst Britons still dominate the numbers of Spanish property sales to overseas buyers, it is expected that demand from other foreign purchasers such as the Middle East and United States will continue its upward trend throughout 2017. We may also see increased demand in Spains largest metropolitan areas and the Costas from non-EU citizens following slowing demand for high end homes in London post Brexit. Chinese and Russian investors in Spanish Golden Visas increased 75% and 49% respectively in 2016 on the previous year and are expected to continue to increase following improvements introduced in 2015. In total 94% of Spanish Golden Visa investments were in Spanish property with Malaga, capital of the Costa del Sol, being the largest beneficiary.
Experts predict average property prices across Spain to increase in 2017 between 2% (Tinsa, a property valuation company) to 3.5% (BBVA bank) with real estate consultants R.R. Acuña & Asociados predicting prices to rise +5% by 2018 continuing until 2020. Similarly Tinsa are predicting home sales to increase by 10% – 15% whilst Bernados predict an increase of 25% to 600,000 total sales in 2017. Inventory of new homes across Spain that have never sold is expected to fall 20% to 388,000 (Servihabitat), opening the doors for increased investment in new home construction in order to meet demand in more popular areas. According to Tinsa planning approvals will rise 20% to 80,000, whereas Knight Frank expect approvals to rise over the next three years to 150,000 per annum, however these will be concentrated in Madrid, Malaga (Costa del Sol), Barcelona, the Basque country and the Balearics.
The fundamentals that have always attracted buyers to Spain; accessibility, affordability and an enviable lifestyle still remain, added to this a growing economy, low financing costs and good potential for both rental returns and capital appreciation all indicators suggest the worst is well behind us and point towards a strong forecast for the Spanish property market in 2017.