An increase in real estate sales shows the outlook for the Spanish property market turned a corner in 2017, as the country’s Land Register Office reported a rise in domestic and foreign purchases in most districts.
Insiders are welcoming the news showing the housing sector has recovered after a disastrous 9 years in which property prices and investments tumbled to an all-time low.
In 2008, the real estate market crashed, on the back of the infamous Spanish property boom in which prices rose to unbelievable levels. The crash caused home values in some areas to drop by a staggering 40%.
Much blame was placed on the construction sector that at that time accounted for 10% of the GDP. With construction now accounting for 5%, Spain weathered the storm resulting in a slight turn around in 2014, and fruitful results appearing in 2017.
Although property prices are yet to recover fully, they are moving in the right direction, and experts say the market has returned to pre-crisis levels.
Spain’s National Institute of Statistics reports that in 2017, 465,000 sales showed the highest growth in foreign and domestic buyers since the market crashed. They are expecting more than 500,00 sales in 2018.
Foreign Buyers in the Spanish Property Market
In Quarter 4 of 2017, foreign buyers accounted for 15,266 sales of property in Spain. The top three buying nationalities were British, Germans and French. This stands for a 20.4% increase year on year, alongside an increase of 19.7% in domestic sales.
British buyers accounted for 2,342 sales, and the increase can be partly credited towards Brexit as Brits look towards property purchases in European countries to keep in with the EU.
The Hot Spot of Madrid
Meanwhile, the Financial Times is reporting a surge in popularity for Madrid, an area previously shunned by foreign property buyers in favour of the Costa De Sol. They say year on year, purchases in Madrid grew by a staggering 50%, and this is expected to rise even further as people turn away from Catalonia following last year’s independence referendum.
The climb back up the ladder of Madrid’s real estate market started in 2014 when the recession ended, but significant increase was seen in 2017, where the price per square meter increased by 620 euros.
Foreign buyers currently account for 18% of the Spanish property market, and the FT says nationalities standing out for purchases in Madrid include buyers from Latin America, attracted by a common language and stable politics.
As the central capital of Spain and a centre of shopping, nightlife, art and architecture, Madrid accounts for 20% of Spain’s GDP. The other area contributing towards the optimistic outlook for the Spanish property market is Barcelona.