Spain's property market has shown resilience since the global financial crisis of 2008, and 2022 was a particularly dynamic year for the sector. Despite concerns about rising energy costs, price-led inflation, and increasing Eurozone interest rates, the Spanish property market is expected to remain strong in 2023. Several trends will continue to drive growth and investment in the market.
Trend 1: Investors See Properties in Key Locations as a Safe Choice
From March 2021, following the COVID lockdowns, the Spanish real estate market has already rebounded significantly. Buying property in key locations in Spain, such as the Costa Blanca, Costa Cálida, and Costa del Sol, is seen as a safe investment option throughout 2023. These areas are particularly attractive to investors interested in rental properties since the tourist season in these popular holiday destinations spans at least 10 months of the year. Whether individuals are looking to relocate, purchase a holiday home, or invest in rental properties, key areas in Spain will continue to attract investors in 2023.
Trend 2: Sales Expected to Slightly Decrease in 2023
ING bank predicts a "cooling down" of the property-buying frenzy experienced in 2022, with a more pronounced slowdown in sales at the beginning of 2023. This decrease in sales is partly attributed to the rise in the Eurozone interest rate (Euribor), which makes borrowing more expensive. However, areas with a higher number of overseas buyers, like the Costa Blanca and Costa Cálida, are expected to be less affected by the economic downturn since many buyers in these areas do not require financing or have already secured borrowing from their home countries.
Trend 3: Potential Slight Reduction in House Prices
The price of properties across Spain, especially on the Mediterranean coast, has seen a sharp increase in recent years. However, experts believe that house prices in Spain will not continue to rise at the same rate in 2023 due to ongoing economic uncertainty. While buyer demand is expected to remain stable, potential buyers may postpone their purchasing decisions until the economic turbulence settles. Experts predict slight price drops of 1-3% in house prices throughout 2023, making Spanish properties competitive compared to other international markets. It's worth noting that this trend is unlikely to apply to new builds, as their production costs have increased by 10% over the past two years.
Trend 4: Continued Demand from Overseas Investors, Mainly European
One of the key drivers of Spain's real estate market recovery in 2021-2022 was overseas buyers, including British, Irish, and US citizens. While the enthusiasm to invest in Spanish properties may ease off slightly in 2023 due to the economic crisis, Spain remains an attractive investment opportunity. With 90% of foreign buyers being cash buyers, the increase in mortgage rates in Spain will not significantly affect them. For the remaining 10%, mortgage rates in Spain are still relatively cheap compared to inflation. Spain will continue to be viewed as one of the best countries for relocation, remote work, holiday homes, and rental investments in 2023. However, due diligence is necessary when navigating the Spanish real estate market, and working with an experienced estate agent is recommended.
Trend 5: Buy-to-Let Properties Provide a Good Return for Investors
The rental market in Spain is expected to continue growing steadily in 2023, presenting excellent opportunities for investors interested in buy-to-let properties. Popular tourist areas like the Costa Blanca, Costa del Sol, and Costa Cálida offer a wide range of rental properties, including apartments, townhouses, and villas. Investing in buy-to-let properties in 2023 can provide a long-term recurring source of income that offers higher returns compared to other investment sources.
Trend 6: Growing Interest in Sustainable Properties
The increased environmental awareness following the pandemic has led to a growing demand for properties with sustainable features. In 2023, more buyers are looking for properties with solar panels, eco-friendly materials, energy-efficient appliances, and low-flow toilets to reduce their environmental impact and lower utility bills. The Spanish property market offers a wide range of sustainable properties, making it a great investment opportunity for buyers interested in minimizing their home's impact on the planet.
Trend 7: The Spanish Economy Remains Strong
According to the European Investor Intentions Survey 2023 report by CBRE, Spain ranks fourth among countries providing the highest capital growth. As one of the top-growing countries in Europe, Spain's real estate market is poised to maintain its competitive edge over many EU countries in 2023. The Bank of Spain predicts a 10% return for the Spanish real estate market in 2023.
Conclusion
If you are looking to invest in the Spanish property market in 2023, you can expect a successful year despite the economic challenges. Opportunities abound, and it may be an ideal time to take advantage of these trends, secure a bargain, and secure your investment for the future. For an easy buying experience with full support throughout the process, it is recommended to get in touch with the experienced team at Micasamo. They offer a first-class end-to-end service, including free consultations with legal, financial, and residency advisors, to ensure your investment journey is smooth and secure.
