The impact of Covid-19 on the Spanish housing market and the Costa Blanca in particular

The year 2020 is coming to an end and it was a strange year. Dominated by everything related to the Coronavirus. And we have not got rid of it yet. We yearn to return to our normal life. But everyone knows that that may take some time. The new normal will remain normal for the time being. We have to wait for the vaccines and group immunity. Are we desperate then? Not at all! Orange Villas and other estate agents kept selling properties during this difficult period. And we expect things to get better in 2021.

Impact of Covid-19 on the housing market in Spain

Let us start with the fact that the virus did not change the beauty and climate of Spain. Nature, villages and beaches are as beautiful as they were before Corona. The attraction is as strong as ever.

In the pre-Corona era Spain´s economy grew. So did the real estate market. Once the pandemic is under control, we expect a quick and strong recovery of the housing market. There is no reason to delay or adjust investments. The past shows that when a crisis is under control, the real estate market will recover. Interest rates are low and financial markets remain uncertain. So, investing in bricks is attractive. 

Experts report that the housing market has not collapsed. Potential foreign buyers are waiting to see what the market and the virus will do. But Covid-19 made many Spaniards realize that there is more than a house in Madrid or Barcelona. The desire to live in the coastal region has increased. More space and the own "bubble" is safer. Cities are more risky than other regions if there is a virus. In the Costa Blanca North there were fewer outbreaks than in cities as Murcia and Madrid. So, we can say that the domestic market compensates the lack of foreign buyers. This has consequences for house prices. Many foreigners expect the housing market to collapse. They wait for the ultimate bargain. The truth is that the fall in prices is close to nil and even less for new construction. Expectations are positive. But, if house prices do fall, it will be especially in the lower segment (according to experts). Orange Villas doubts this. In the post-lockdown period, we actually sold more houses in the lower segment. As well as in the luxury segment. 

After the arrival of vaccines and group immunity, the Spanish housing market will go up. Demand will be very high because it is not only related to the national market. Foreigners will also return to the Spanish real estate market. The Spanish Government intends to introduce measures to stimulate the housing market. One idea is to increase VAT on new construction from 10% to 4%. Builders are optimistic. They do not believe in a negative effect of Covid-19. They might postpone some projects. But, significant price reductions on new construction are not expected.

Three types of clients in Covid-19 time

In principle, there are 3 types of customers.

a. The "quick deal" buyer

The measures and restrictions restrict both buyer and seller in their actions. A group of buyers (and sellers) wants to act quickly under the motto "now it still possible".

b. The "I don't want to lose more" investor

Investors with considerable assets see their money disappear during this period of uncertainty. Real estate is still one of the safest choices for investing money.

c. The bargain hunter

There are always bargain hunters on the property market. The unpredictable nature of the current situation makes bargain hunters more active. They are willing to take quick action. 

What will happen in 2021?

Nobody has a crystal ball. Expectation is that the Spanish housing market improves and strengthens in 2021. After 11 months of price reduction, in November 2020 the price for an existing house in Spain went up. It is a modest increase (0.7%), but it is a milestone. It brings an end to the price decline that was going on. 

During the pandemic there was demand for houses. But the actual buy got postponed. The desire to buy a house is still there. 

Experts say that, due to Corona, people have spent less. So they have been able to save more money, which makes the decision to buy a house easier.

It is also expected that the buyer's wish list will change in 2021. There will be more demand for larger houses with considerable outdoor space. Most likely with an extra room that can be set up as an office for working from home. Some will want a garden to grow crops for their own consumption. Self-sufficiency will become more and more important.

Demand is likely to increase in coastal areas such as Moraira, Javea and Benissa. This means that prices will stabilize or even rise. In tourist areas, prices can rise by about 2.3% in 2021. But the "countryside" will be popular as well. In particular on the national market, demand for objects in the "campo" increase. A price increase is also expected in this segment (fincas). 

The only price decrease is in the regions where only Spanish buyers are active. And houses with an age of more than 20 years. 

New construction continues to be booming. Construction companies are healthy. They do not have to lower their prices for projects. The potential for Russian and Chinese investors will increase. 

What to do in times of lockdown restrictions?

We will not deny that it is currently more complicated to view properties. The travel restrictions do not lie. So, there are fewer visitors. But we do notice that the potential buyers coming to this region at the moment are extremely serious. We used to go out on a regular basis with customers who didn't want to buy in the upcoming years. Now we deal with customers who want to buy at very short notice. So this customer is serious!

What can I do as a seller?

As a seller, you may not get as many viewings as you had hoped for.  As said, the current customers are serious. Make sure the house looks tip-top. Have a critical look at your property. Is everything clean? Does it need paint here and there? A house that looks good and has a realistic price is a "killer". Fear of infection with the virus during a viewing is not necessary. Customers and agents wear mouth masks and disinfect their hands. If you insist, everybody wears  gloves during the viewing.

Consider the benefits of listing your property exclusively with  Orange Villas. As well as the huge window display for your property by joining us as an MLS:03724 real estate agent. 

Don't delay putting your property on the market. There are still clients and as said: serious. Do you want to sell your property? Contact our team today for a free consultation and taxation. 

What can I do as a buyer?

"I want to come, but it's not possible because of Covid". How often we hear that! But this is not a problem. For most houses it is easy to arrange a video-viewing. One of our sellers will go to the house and show you the house by means of a videoconference. The big advantage is that you can ask questions, make comments etcetera real-time. If you like the house, at least you know that you will not come for nothing in this difficult time of travelling.

"But what if I want to buy the house and I can't come to sign a contract? That is not a problem either. If we work with power of attorneys that the Spanish law approves it possible to conclude the deal. This way you can still sign without having to come to the notary yourself. We work together with a respectable notary in the UK that can help you with this.

Have you not yet reached the point where you know exactly what you want? Then use this Corona time to think about your wishes. Which area? Close to schools? Number of bedrooms and bathrooms. Do you want an extra room to be able to work from home? What kind of outdoor space do you want? In times of lockdown, you might want a playground for the children. Or a place to walk the dog etc. You might want to grow your own crops in order not to depend on the supply in the supermarkets. Do you want your own energy supply by means of solar panels? Questions that have become "hot" due to the pandemic.

The corona time is not easy for anyone. Every individual has his or her story. But we want to emphasize that there are still great opportunities. For both buyers and sellers.

The Orange Villas team is standby to answer your questions. If you are a seller, we will be happy to tell you on how to sell your home faster. Are you a buyer? Then we will do everything we can to find your dream home as soon as possible. 

We realize that Corona time is a difficult time. And we express our sympathy to those who were actually affected by the virus. 

There is a good chance that the pandemic will be under control in the first months of 2021. So, there is a bright future for everyone.

We look forward to seeing you at our office in Moraira!