With the arrival of spring, Spain's islands and coasts are regaining their tourist appeal, which means a boost for housing transactions. But what can we expect for this year, marked by uncertainty? We ask the experts whether and by how much sales on the Spanish coast will increase in 2023.
Fewer sales and slight price drops for coastal homes in Spain on the horizon
Sun, good weather, houses by the sea... for both nationals and foreigners the coastal areas and islands of Spain are very attractive. They tend to be areas with high demand and consequently the prices of their houses are higher.
What is clear is that the tourist factor has increased since the pandemic has stopped, and in these areas it is particularly relevant and there is greater foreign investment in second homes during holiday periods.
"There has been a change in the behaviour of buyers as a result of the pandemic, who now tend to prioritise their wellbeing and buy their homes away from the big cities," remarks Francisco Sierra, Casavo's general manager for Spain and Portugal.
According to the latest report from the Real Estate Credit Union (UCI), Spanish real estate agents expect a decline in housing transactions of around 4.2%, as well as the existence of several key agents for the development of the residential sector in the second quarter of 2023. The main ones are high inflation and rising interest rates, which may fluctuate over the coming months. This adds uncertainty to the market, which may slow the pace of sales and purchases on the islands and coasts.
Casavo believes that transactions in these areas will be contained, taking into account the latest data from 2022, and that prices will suffer a slight drop due to the decline in demand due to the rise in interest rates and reduction of the stock that is occurring across the board.
On the other hand, for his part, Jesús Duque, vice-president of Alfa Inmobiliaria, reflects that the Spanish coast, and more specifically the Mediterranean coast and the two archipelagos, are highly consolidated areas and that, for various reasons - a mild climate, high quality of life, etc. - they maintain their appeal, "both for Spanish and international buyers, even in times of economic uncertainty".
He also points out that the pandemic has increased the demand for properties outside the big capitals, where it is possible to lead a new lifestyle, where it is possible to work and live with more outdoor space.
"We therefore expect to see an increase in property sales on islands and coasts in the second quarter of the year, and not only from Spanish buyers, but also from foreign individuals, who are looking for a home, even at reasonable prices, in our country," comments the expert.
The most valued areas: will this also be the case in 2023?
In addition to the capital cities, the coastal areas and islands are always of great value when buying a home. Casavo stresses that all the data point to the fact that these areas will continue to be valued throughout the year despite fluctuations in prices and demand. "In 2022, and according to data from the National Statistics Institute (INE), the Canary Islands led the growth in the sale and purchase of homes with a rise of 31.6%. Other areas such as the Costa del Sol and the Balearic Islands will continue to be areas of interest for wealthier buyers given the valuation per square metre that these areas receive and the price rises that they experienced in 2022".
At Alfa Inmobiliaria it is clear to them that the values most appreciated by buyers of homes on the Spanish coast have remained unchanged over the last 50 years. These values are basically the good climate of the Mediterranean coast and the Canary Islands and the quality of life it offers: a quiet, relaxed and safe lifestyle, a rich and varied gastronomy, a multitude of cultural and leisure activities; the advanced accessibility of the Spanish coast, with an important network of road access, public transport and airports; and the stability and profitability of the Spanish property market.
Profile of island and coastal buyers in Spain
Many citizens from Central and Eastern Europe continue to buy homes in different coastal areas of Spain. "One example is the Costa Blanca in Alicante. Already in 2022 there were large transactions by German, Dutch, Polish, Romanian and Lithuanian buyers, as indicated by the Notary Association of Valencia. Transactions in the province of Alicante amounted to 31,691, marking a record year," Francisco Sierra points out.
Other facts such as the current geopolitical context, which has led to an exodus from Ukraine to the whole of Europe, means that many Ukrainian citizens are looking for alternative housing in different parts of Spain, with a focus on the coastal areas of Alicante.
"We must not forget that the Costa del Sol, in Malaga, has traditionally been an area of foreign investment in housing, as are the Balearic Islands where, according to the Property Registrars, 36.15% of transactions in the fourth quarter of 2022 were by foreign buyers", according to Casavo.
For Alfa Inmobiliaria, the home buyer on the Spanish coast is mainly of national origin, although the number of international buyers is high. Local buyers are basically families who buy a second home to enjoy it and simultaneously invest. And on an international level, Jesús Duque points out, "European buyers are also very frequent, especially those from France, Germany, the Netherlands, Belgium, Sweden and the United Kingdom. In recent years the number of Latin American buyers has also grown considerably, especially those from Argentina, Mexico, Colombia and Venezuela, who are interested in acquiring properties on the Spanish coast, and in many cases take advantage of this to obtain the Golden Visa".
Will house prices rise or fall on the Spanish coast in 2023?
Duque stresses that prices should slow down, but the truth is that this moment has not yet arrived, despite the constant rise in interest rates and the cost of living, which is reducing households' spending and savings capacity.
"I believe that inflation is leading many families to invest their savings in housing, and coastal housing is a product to be enjoyed, in which more and more people are working, and which is usually cheaper than housing in large cities, which is why, to date, we have not seen a fall in prices".
Casavo's view is that the general context has a direct impact on the context of each area, but by having different regulations, each area can experience different behaviours. An example of this is the Balearic Islands. Recently, the regional government presented a proposal to restrict the purchase of homes by non-resident foreigners. "Despite the fact that the initiative is contrary to the Treaty on the Functioning of the European Union, as some legal experts point out, if it goes ahead it will have consequences on the behaviour of the market and its prices due to the fall in demand that may occur".
However, in general terms, experts predict that the impact on prices in these areas will be less than in the rest of Spain.