The uncertainty in the real estate market for sales as well as rentals, generated by the economic crisis as a result of the pandemic and restrictions on activity, makes it very difficult to forecast how prices will evolve. According to the Offical College of Real Estate Agents of Spain (COAPI), the decrease in the purchasing power of buyers may lead to a reduction in prices, but there are also other factors that may affect the future evolution of prices.
"If we dared to generalise, which we wouldn't recommend, we could speak of downward adjustments generally speaking, but with an upward trend as demand rises again in the mid-term," they stated. “But it is too risky to make forecasts. To give us an idea, even what happens with the regulation of rentals will influence the price trend. If properties that were destined for rentals move onto the sales market, that will change everything."
In an analysis of micro-markets segmented by neighbourhoods, type of housing or types of market, it can be seen that property prices have not only not decreased, but actually increased. "This is happening with commercial premises located in non-prime areas, as a result of an adjustment in prices increasing since 2008".
When it comes to housing, real estate agents once again emphasise the role of location. Used housing in central areas may have a better evolution than any new housing available in less privileged locations.
Owners and investors are waiting for the new Housing Law and the possible regulation of rental prices before reacting. "In the free market, everything is regulated by the laws of supply and demand: an 'external' intervention causes supply to be reduced and, if demand increases at the same time, the result could be totally different from what was originally expected", they affirm from COAPI.
Among the factors that could occur with a limit to rental income, the most important is a greater demand on the tenant's profile, tightening the conditions of access to housing and consequently penalising the most disadvantaged groups.
On the flip side, the second-home and holiday-residential markets have seen a lesser drop in demand despite mobility restrictions, a drop in tourism and a decline in local demand. From COAPI they point to technology and the innovation of real estate agents as the reason for cushioning the fall, thus also carving a path to recovery in the future.
“Our API colleagues have been able to reinvent themselves, prospecting in other markets that were not the traditional ones and using technology as they had never used it before. Perhaps, thanks to this, the coastal market has been reasonably maintained” explains the COAPI spokesperson. "It is true that there is still fear and uncertainty, but also a lot of desire to work and innovate that, fortunately so far, has mitigated the situation."
(Source - COAPI)