Mark Stücklin has been crunching the numbers and revealed that the October figures showed a slight decrease in overall demand compared to October 2021, the first decline in overall demand since January 19th 2021. But he was quick to say that it was only 4% down and that he didn’t feel it was a bad sign, simply the post COVID boom running out of steam.
Foreign demand was incredibly high, especially in the first half of the year, more than double what it was even in the boom year of 2007 and up 53% compared to last year. International buyers represent 20% of the market and it’s clear that the foreign appetite for properties in Spain is very high.
Buyers from Poland, Bulgaria and Ukraine are on the up, as are buyers from countries around Russia, looking for a safe place to be, far from the conflict. British buyers haven’t been put off by Brexit and are still growing, increasing by 68% in the first half of 2022, still representing the biggest group of buyers by nationality and with a seemingly undiminished appetite for property in Spain.
Sean Woolley agrees that these figures were reflected in practice on the Costa del Sol, with a very busy period January to August, followed by a noticeable drop off in demand. However, like Mark, he doesn’t feel this is anything to be alarmed by, simply a tapering off of the post COVID demand and a return to more normal levels.
In the Marbella area, he’s seen a huge increase in buyers from North America, and more interest from the Middle East and Far East, attracted by the global brand of the Costa del Sol.
Despite rising interest rates, a cost-of-living crisis, an energy crisis and a war in Europe, people have continued to be attracted by the quality of life, safety, weather and lifestyle in Spain and been liberated by home working to pursue their dream of living, or owning property in Spain, hence the strong figures.
Predictions for 2023
While neither expert has access to a crystal ball, they both agreed they felt cautiously optimistic and definitely did not feel there was going to be a crash in 2023.
Sean Woolley commented, “I am between cautious and optimistic for 2023. I think we're going to see the people who really do want to make a move, or make an investment here, continuing to do that.
I think we are going to see a little drop off in prices that needed to be corrected in certain areas. But I don't think people should expect a fire sale, because we don't have any of those underlying conditions in place as we did at the start of the financial crisis.
Some clients are already starting to try to make comparisons, and are waiting for a 40% drop in prices, but there's no evidence showing us that's going to happen. There isn't a problem with the supply of money, banks are still lending, there's high employment and demand.
It does frustrate me when people compare it to 2008. Because the conditions are just not alike in any way. And we have a different driving force behind most people's decision making - they want a better quality of life for themselves and their families in a post COVID world.”
Mark adds, “There won't be the growth that we saw this year. You could interpret it at as Spain's heading downwards, but that’s not the case - it's just settling down.
The interest rates increase saw sales brought forward, which is going to depress demand in the first half of this year, to a noticeable degree, mainly for the local market.
But I don't see any reason out there to be worried about a crash or a bubble, because there's no building bubble. In fact, Spain's housing stocks are declining and are at near historic lows. Spain is not building anywhere near as much as it should, given the size of the population, the age of the housing stock, and other factors. Government policy will discourage investment in housing, house building, and the quality and quantity of the rental market. This favours property owners and puts upward pressure on prices.
So, I don't see reasons for a bursting bubble scenario or a crash scenario. I definitely see some headwinds, but there's still some good tailwinds. So overall, I expect 2023 will be a post boom settling down.”
Mark and Sean will be back with more Spanish property market information and insight in January. You can find the La Piedra podcast on the Cloud Nine Spain YouTube channel on Apple Podcasts and SoundCloud.
Meet the experts
Sean Woolley is the Founder and Director of leading real estate agency Cloud Nine Spain, which operates on the Costa del Sol, Costa Blanca and the Costa Calida.
Mark Stücklin is a property specialist, market analyst and commentator - one of the authorities in the industry, often quoted by the UK media when they speak about Spanish property.