This article is a modified and translated version of an article originally published on, a leading property portal in Spain. See original here.

A new real estate boom begins!

Gonzalo Bernardos, economist, analyst, and professor at the University of Barcelona gives out his forecasts for the real estate market in Spain. He analyzes in detail the current situation and the prospects of the residential market in Spain.

The outlook could not be more promising for the real estate sector and his forecast includes increases in transactions and prices and a promising scenario for those who want to sell their home in good condition. Buyers, on the other hand, will no longer have the privileged position they have enjoyed in the last fifteen months.

What is the current situation of the real estate sector in Spain?

The current situation in the real estate sector is satisfied since the real estate crisis generated by Covid-19 has been much lighter than expected, with a drop in transactions in 2020 of 14.5%. The main explanation lies in very low interest rates, a high predisposition of the banks to grant mortgages, and the appearance of a new source of demand for housing.

On this occasion, the bank has been the best ally of developers and real estate agents. In the previous crisis, it was the great enemy. One piece of data clearly shows its magnificent role: in April 2021, financial institutions granted 31% more mortgage credit than the monthly average for 2019.

However, the big surprise has been the appearance of a demand from the upper-middle and upper classes that have bought high-end homes on the outskirts of the cities. In the case of Barcelona, ​​especially in nearby coastal towns and, in Madrid, in nearby municipalities with a high quality of life or in the mountains.

At the end of last summer, Gonzalo Bernardos estimated that prices could drop by up to 30% in some areas. But what has happened in these months?

Contrary to what some statistics say, his impression is that housing prices in the last fifteen months have not risen, but have suffered a moderate decline. The explanation for the difference is that there is a higher percentage of homes sold at a high price and a greater difference between the offer price and the closing price. In any crisis, those who have the upper hand are the buyers, as they get more substantial discounts than in a normal stage.

In most cities, real estate agents have seen price drops are between 5% and 15%.

The most frequent reduction is between 5% and 10% but in the eminent tourist towns, the main victims of this crisis, there have been decreases of 20-30%. However, in the country as a whole, they constitute an exception to the rule.

! In most touristic cities, property prices have decreased by up to 30%

What says Gonzalo Bernardos about the situation in the real estate market in Spain?

The crisis is over and a new real estate boom begins. The conditions in the next two years are excellent for a large increase in sales and a moderate increase in price to take place. Specifically, economic growth of more than 6% in 2021 and around 7% in 2022. Both represent the highest increases in GDP since the arrival of democracy.

! Economic growth is forecasted to be 6% in 2021 and 7% in 2022

From the macroeconomic perspective, the above factor is joined by the continuity of a very low interest rate, a mortgage war between financial institutions, and the highest savings rate for families compared to disposable income in the last 30 years.

On the other hand, housing is unrivaled as a low-risk investment, as fixed-income currently offers very low returns. The production of new homes is very low. Teleworking, even partially, will continue in the coming years. A characteristic that will allow the wealthy classes to constitute an important source of demand in the coming years and to buy homes in the vicinity of cities. Finally, for a home with similar characteristics, the cherry on the cake will be a lower amount of the mortgage payment than the rent.

Due to all the above reasons, the logical result is the appearance of a new real estate boom in 2022 and 2023.

In 2021, the price in the second half of the year will grow more than it fell in the first and, at the end of the year, the rise can be around 3%. The transactions will accompany and rise 15%.

In 2022, the price increase will approach 10% and sales around 15%. Undoubtedly, all this constitutes a magnificent situation for professionals in the real estate sector, since the price rises, also the transactions and there is no trace of the formation of a real estate bubble.

Spanish property prices will increase by 3% in 2021 and 10% in 2022

About the situation of the new construction.

Gonzalo Bernardos don’t think that there is much more demand than supply. The phrase “there is much more demand than supply” is an advertising slogan of some promoters. However, he agrees that developers have not done badly in the last fifteen months.

There have been three main reasons: they had sold the vast majority of the almost finished homes when Covid-19 arrived, the crisis was short and, especially in Madrid, they owned a large number of units on the periphery. One piece of information says it all: in the capital of Spain, sales in 2020 decreased by 22%, in the rest of the province only 6.1%.

The developers can perfectly withstand a crisis of one or two years. Especially if the families, who have advanced a part of the price, do not give up the acquisition of the house and have a significant demand for investment funds that want to buy real estate to apply the “build to rent” mode. In the latter case, the profitability obtained is lower (a 30% price discount is not strange), but in return, they have complete security that all the houses built will place.

Although many publicly deny it, in the last fifteen months they have made small reductions or kept the sale amount, but giving away the parking and the storage room. If the crisis is long, the banks do not give credit and they “resist” without almost touching prices, the result is a drama: the disappearance of a large number of promoters. This is what happened in the past decade.

What would the advice right now to anyone who wants to sell a property? And who wants to buy it?

Gonzalo Bernardos says that in a situation like the current one, whoever wants to sell a property would advise them to have peace of mind, as long as they do not need the money. In the near future, his apartment will be worth more than it is worth today.

Buyers who make up their minds quickly, otherwise the opportunities will disappear. It will be seen and unseen. In the coming months, the acquirers will stop sending in the market and the sellers will do it again.

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