After a 5% rise in 2019, experts predict that by 2020 the properties will continue to become more expensive, but at a slower pace due to weak demand, which will slow down sales. Rentals will increase 5%.
The housing market has accumulated steep consecutive increases since 2014 and is preparing to slow down the pace. This is the forecast that manages the consensus of experts in the real estate sector which insists that if something is going to characterize 2020 it is moderation and prudence.
These criteria are closely related to the economic slowdown and the uncertainty generated by the housing measures that the newly formed Coalition Government between PSOE and Unidas Podemos may soon launch, as well as the regional governments and town halls.
In this scenario, the consensus foresees an average increase in the price of housing at a national level of between 3% and 4%, compared to the rebound of 4.5% recorded in 2019 and 5.4% in 2018. However , experts also insist that the evolution will depend on the demand in each area.
Madrid has displaced Barcelona as the most stressed real estate market in Spain, with rising housing prices in property and unparalleled rent in other capitals, according to the study “Perspectives of the housing market” conducted by Professor Josep Oliver, Professor of Applied Economics at the UAB, and the Anticipa real estate agency, which is presented today at the Barcelona Meeting Point (BMP).
Oliver explains that although the real estate recovery began earlier in Barcelona, and with more force, in the last two years Madrid has taken over and prices rise more intensely and have more upward travel.
Thus, the study foresees a rise in property prices of 6.5% and 6% in Catalonia this year and next year and 7% and 6.5% in Madrid, where prices will be in 2020 already 0.6% above the maximum of the 2008 bubble, while in Barcelona they will still be 13.6% below. Regarding rent, the study foresees that rents will grow in the metropolitan area of Madrid at rates of around 10% per year until 2020, while for the Barcelona area the study foresees annual increases at rates around 7%.
The study foresees that the increase in the property prices in Spain as a whole will continue, 5.5% this year and 4.9% in 2020, and that sales will continue to increase although at a slower pace. The CEO of Anticipa, Eduard Mendiluce, said that the “housing market continues to maintain strong fundamentals” and described the slowdown as “an adaptation of the market against the constant growth of the last 17 quarters.” In Oliver’s view, the stability of the Spanish economy, low interest rates and expectations that they will not rise, oil containment, low inflation with stronger wage increases and job growth allow us to anticipate that the market Real estate will remain strong.
The two large capitals account for 42% of the families that live on rent in Spain. Anticipa’s study highlights the strong growth that the rental market has experienced: two thirds of new homes are created for rent. In 2018, 480,000 contracts were signed and are expected to exceed 500,000 each year until 2021. Thus, there are already 3.12 million families living in rental market (16.8% of households), but this percentage reaches 23.35 in Catalonia, 22.7% in Madrid and only 14% in the rest of Spain. Madrid and Catalunya concentrate 42% of the rental park in Spain.
The profile of the families who are renting has changed, and although they are still mostly single people and couples (1.7 million households) the group that grows the most are the families of 3 and 4 members (they are 1.4 million households, but from 2014 to 2018 they have grown 28% and 17.5% respectively).
There is a lack of stock in the big capitals, but there are still 1 million empty properties left of the 2008 boom
In Spain there are 3.4 million empty homes, of which 764,000 consider them “park in the shade”, because they are unfinished structures or in a state of deterioration that prevents their use, and another 1.48 million houses “structurally empty”, located mostly in very rural areas under depopulation.
Another 1.14 million homes are instead in urban settings, remnants of the old real estate boom, and of them 664,000 are still new: they have never been occupied. There is a lack of properties in areas with low demand, while these properties are in areas that do not attract users. This unsold stock will also not decrease in 2021 because although some 300,000 might be sold, an approximately equal number of new homes will be built.
Faced with such a dilemma, the panel of real estate experts resolves that housing will continue to become more expensive, but at a slower pace, and that sales will continue to show solidity, although at levels similar to those already seen in recent years. That is, sustained increases, but less dynamism.
After an expected 5% rise for 2019, experts predict that by 2020 the properties will become more expensive by 3%, although the fork will move from 2% to 5%, depending on the micro markets. Madrid and Barcelona will cease to be a locomotive to experience flat growth or even falls, in the case of Barcelona, although they will continue to attract investment and maintain a dynamic rental market.