Property prices in Spain: prices of second-hand properties fell by 9% before the summer (and could fall further)

The price of second-hand housing in Spain is suffering the effect of the coronavirus crisis and, according to experts, prices are bound to fall further in the coming months.

A study by the real estate network Comprarcasa adds to this scenario and figures a 9% average decrease in the price of used housing in the months of May and June, in the midst of the de-escalation after months of lockdown in Spain.

According to the data handled by the company, which has more than 150 agencies across Spain and Portugal, in the months prior to the summer, potential home buyers proposed discounts of between 15% and 20% to owners interested in selling a residential property, although after negotiations between the parties the average reduction was around 9% compared to the initially published price.

Toni Expósito, general director of Comprarcasa, does not rule out the possibility that the downward trend in the price of housing will become more pronounced, although this possibility is framed in a very specific scenario: to see more decreases, the exit from the crisis caused by the COVID-19 would have to be delayed and financial institutions would not facilitate access to mortgage credit.

For the time being, banks are increasing the requirements to grant loans for the purchase of housing, as clarified by the real estate network. A problem that is added to this is the fact that property valuations are increasingly adjusted, derived from a recommendation made by Banco de España (the Bank of Spain) to appraisers in order to analyse the market in the midst of the pandemic and that, according to experts, could lead to an expulsion of customers with less savings from the mortgage market.

According to Expósito, "we are faced with a very conservative view of housing at a time when the demands of financial institutions when granting mortgages are growing and, on the other hand, valuations or appraisals are becoming more and more adjusted, making it extremely difficult to access a home or to jump from one to another with greater benefits".

In his opinion, prices could be adjusted more from September, although he denies that the current situation is similar to that experienced after the collapse of the property bubble. In fact, many studies suggest that this crisis does not call into question the fundamentals of the sector.

"Although the outlook for the next 6 months does not look very promising, the situation has nothing to do with that of the last crisis. The big turning point is at the turn of summer, and if the economic situation does not improve significantly, housing may fall between 3% and 5% more," explains the general director of Comprarcasa.

In his opinion, the main difference with the previous crisis is that there is currently no large stock of unsold homes, that the level of household debt is lower and that both families and banks are better prepared to overcome the economic turbulence.

Nevertheless, Expósito points out, "the fear of so much uncertainty could lead us to end the year with a drop in sales of close to 25% during the current year, which will probably lead to a drop in prices, given the reduction in demand".