Analysis of the real estate market 2021
April 12th, 2021 |
The COVID-19 pandemic hit and paralyzed the Spanish real estate market with the same force as all edges of civilization. The initial expectations that were projected for this market lagged because when they were issued, it could not have been foreseen that the virus would become a pandemic.
The year 2021, however, is another story: the whole world is aware of the pandemic and its implications, and little by little, it begins to adjust to what many call “the new normality.” The expectations of this year can hardly be the same as those of the beginning of the previous one.
But what could be the significant changes? It is worth putting your money in the world of real estate? Keep reading and we will show you everything that is most relevant to the real estate market in 2021.
Year 2020: pandemic versus real estate market
At the end of 2019, much more than 600,000 purchases and sale transactions were anticipated for 2020. Indeed, the first two months of the year, operations exceeded those of the last four months of 2019 in both used homes and new construction. In January and February of last year (2020) there were 46,900 and 44,100 sales, respectively.
In March, April and May, operations were drastically reduced, May was the period of less activity with 22,400 operations for the purchase and sale of housing, and although the registered transactions increased little by little, there was no month in which the registered growth matched the beginning of the year on the way to what was predicted. There was also a slight drop in operations during August (31,400 against 32,700 in July), although it did not reach the levels of the three months reported as the most critical.
Obviously, property values decreased (by 1.7%), but at the same time new construction increased by almost 1%. Even when this last figure is the least encouraging in the last five years, growth should not be overlooked for what it is. It should be noted that the sale of new construction suffered less than that of second-hand homes.
Year 2021: it is still a good option to invest
One of the first predictions about the real estate market for this year warns of a significant decrease of 25% in the demand for housing, primarily motivated by the lack of foreign investment and taking 2019 as a reference.
On the other hand, the prices of properties lose 5% for sales operations and 5.6% for rentals. Homeowners are more open to adjusting the sums they expect to receive from buyers. The flexibility in terms of payment methods has led to a shift in favor of new construction.
In summary, the above reveals that it is possible that the year 2021 is favorable for buyers because supply is a bit cheaper and although the recovery of economic development that this market had for more than five years it could have been slow, it’s already underway.
We see that the numbers indicate that the sale of real estate does not lose its potential, that interest on mortgages are low and will not increase anytime soon. But the changes that the real estate market adopts after having lived through the current pandemic should not be underestimated.
In 2020, the world stopped, waiting to solve the health crisis to continue with its routine. Today, it is known that it has to coexist or perish. This 2021 the real estate market is reinventing itself with changes such as the following:
- Properties are visited virtually. It involves from the virtual tour of the property to the reviews and evaluations that the buyer can rely on to understand the behavior of the market.
- They are booming in rural areas and small towns. More people choose to get away from the big cities.
- Energy-efficient single-family homes and floors with interior and exterior patios are gaining popularity. In general, buyers favor the more spacious ones and those with community green areas.
Although the predictions for the year 2021 predict the transformation of the market, it is possible that it will not properly recover its growth rate until the last three months or even the coming year 2022.
Real estate market in Costa del Sol in the second year of the pandemic (2021)
Surely you are aware that the Costa del Sol real estate market is prominent in the province of Malaga and in Spain in general. It is a region that has great natural, historical, artistic and cultural attractions, but that does not stop offering tourism and luxury life.
Since 2016 and with greater force in 2018, the revaluation of the area had grown rapidly and constantly. This attracted the attention of national and European investors who were looking to acquire properties that would generate significant passive income for them. Also of those who simply wanted to have secondary and vacation homes that, after the pandemic, many ended up renting in the medium and long term.
Facing the pandemic, the real estate market in this region will be relatively safe. After so much confinement and so many human losses, confinement and social distancing seem better options. More when it is done in a home with outdoor spaces that allow to overcome the claustrophobia caused by quarantine. That is exactly what buyers are looking for (and finding) on the Costa del Sol.
In general terms, the real estate market, like everyone else, has had to adapt to this new way of life.The omens are optimistic, especially for buyers. Either by having a new place to shelter from the virus in a more bearable way or by earning passive income, investing in real estate is still a good option in the medium and long term. Expectations specifically for the Costa del Sol are even better.
It is fair that we say that in the year 2021 the new – and in many ways improved – real estate market after the health crisis begins to show. If you are still pondering on whether you should buy a property and you have the conditions to do so, do not think about it so much and do it.
Article by Vanesa Mena, Apr 12, 2021
Apartment, Albatross Hill, Marbella