Keys to the Real Estate Market in 2020
Now that over half of 2020 has passed, we can establish some keys to the real estate market that will mark this year. In recent years, investing in real estate was a safe choice for many people.
The Spanish real estate market attracts many foreign investors who decide to buy properties in the country. Among the cities that lead the investments are Madrid, Barcelona, Valencia, and Marbella, for example.
Additionally, it’s important to bear in mind that the real estate market is quite uncertain and it’s always been this way. Real estate is linked to economic and international affairs, which always have big ups and downs. For example, Brexit or the trade war between the US and China.
The world of real estate is interconnected, and everything that goes on around the globe directly influences the market. The real estate sector experiences global fluctuations and takes them into account. So far, it seems that the first quarter of 2020 will be similar to the last quarter of 2019.
The pressure of international funds on the Spanish real estate market focuses on the residential rental format. New formats have arisen, such as the well-known ‘co-living’, ‘senior living’, or ‘micro-living’.
Currently, there’s very little rental home supply in Spain and it’s well below the European average. The data show that the percentage of rental homes in Spain is still almost 10 points below this average.
If you want to invest in the Spanish property market, this article will interest you. Next, we’ll be talking about the keys to the real estate market in 2020.
Housing prices stagnate
The continuous growth of house prices has been constant in recent years. However, in 2020, everything points to prices becoming stable.
There may be temporary adjustments in the real estate markets. Despite this, the shortage of new construction will lead to prices continuing to rise.
The rental market will also go through a price stabilization process. Some people believe that there may be occasional drops in some markets and cities.
The opposite will occur in large cities, where the prices will continue to rise due to migration. This, along with a lack of supply, will cause prices to continue rising steadily in the coming months.
Consider coastal areas for your residential home
If you’re looking to invest in permanent residential housing, we recommend you opt for the coastal areas. Whether you’re looking for a first home or a vacation home, we assure you the coastal areas are appealing.
For example, the Valencia area is an excellent place to invest, whether you want to buy a property to rent or to live permanently. Generally, the Mediterranean Sea area is a great choice, and if you go further along the coast you’ll find the Costa del Sol area.
If you don’t want to spend a ridiculous amount of money, then forget about big cities, such as Madrid or Barcelona. However, don’t forget that in these two cities you can also find many investment possibilities. In the end, it all depends on what you’re truly looking for.
Keys to the real estate market in 2020 – ‘Co-living’
Thanks to the different variants of ‘co-living’, this new way of living will be popular this year. The construction of new projects will revitalize depressed areas of Madrid and Barcelona, giving alternative housing options.
However. it’s vital to realize that not everything is positive in this new movement. The truth is that there’s a lot of uncertainty surrounding it when it comes to the rules and regulations and the lack of land.
Tourism will continue to boost the sector
The tourism sector is one of the strongest in Spain. The number of tourists in the country has always been on the rise. However, there has been a small slowdown in this sector in 2020.
Despite this, the number of visitors is key for tourist rental, which will put even more pressure on rental prices. It’s here where Brexit plays an important part since, if an appropriate exit is agreed on, the residential market in coastal areas won’t suffer too much.
The British market that chooses to live in Spain is one of the most important in the sector.
The creation of new costs in the sector
The real estate sector has key actors on which it depends and whose actions impact its growth. The most important are those that establish the rules of the game. We’re talking about the government, the banks, and loans since these last two define how profitable investments are.
The Spanish government has been experiencing a historic level of public debt so it must do something about it. In 2020, it’s more than likely that measures will be applied to fix this problem.
Moreover, it’s estimated that there’ll be an attempt to reduce public debt through the implementation of additional taxes on banks, which will affect mortgage rates. There’s also talk of movements in interest rates.
Investors should be aware of the policies implemented by the Spanish Ministry of Economy to develop investment strategies. Most likely, there’ll be several additional costs that will make investments no longer as profitable.
The construction of new homes will stabilize
During this year, the construction of new homes will recover, with a total of 94,000 finished buildings throughout the Spanish territory. This figure is significant since it hasn’t been achieved since 2013.
Experts point to a stabilization in the construction of new properties in the coming years. This will lead to a reduction in available housing.
If you plan to invest in the real estate market in 2020, you should take into account the keys we have provided you in this article. Best of luck!