House prices will drop in Spain in response to the urgent need to sell because of the coronavirus

Falling house prices in the coming months is the prediction of real estate agency Century 21

Freepik
Freepik
15 April 2020, Redaction

Ricardo Sousa, CEO of Century 21 in Spain and Portugal, sees it highly probable that "due to the economic situation of the owners and investors, some have the urgent need to sell in order to face the lack of liquidity, so they will apply discounts to achieve a quick sale of their properties in the short term". Therefore, the firm foresees price falls in the coming months as a result of the coronavirus crisis in Spain.

As far as rentals during this period are concerned, Century 21 assures that the health and economic crisis will be reflected in the non-payment of rent and the sale of real estate assets, in order to recover liquidity by companies and some investors, as well as the sale of second homes. According to the CEO of Century 21 Spain, "this situation will cause the attraction of investors with liquidity, who will have access to buy assets at a discount in the short term".

On the other hand, the firm believes that the sector most affected within the real estate market will be international demand, given that not only are the rest of the European and international markets experiencing a similar health crisis, but the borders to the Spanish market have also been closed.

Although the second quarter will be difficult, the US founded company expects the situation in the sector to recover in the last quarter of the year and return to normal at the beginning of 2021. The company believes that the real estate development business, unlike other sectors, has the capacity to assume a temporary suspension of activity and then resume the pending sale and purchase procedures. Real estate development by nature is a business with a long cycle, so it is prepared to withstand cycles of between 3 and 6 months with lower sales. For this reason, Ricardo Sousa expects "a suspension of purchase decisions, but not a cancellation of sales operations. At Century 21 we are convinced that when this health crisis is over, the sector will be reactivated".

Finally, the firm brings out the good side of this crisis and that is the arrival of teleworking and the promotion of digital tools. In fact, Sousa states that "for the company a significant increase in visits to our digital platforms has been registered, as well as a significant increase in the number of users registered in the application for mobile devices. This is a clear indicator that demand has stopped in time but, with the overcoming of the crisis, it is expected to resume".

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