As we near the end of the year, 2021 has been marked by a favourable housing market surprise, with an increase in home sales and purchases and international investors. The province of Malaga continues to see strong demand for properties outside large cities and is a magnet for overseas buyers due to its climate, golf, culture and Mediterranean lifestyle.
What will 2022 be like?
What is clear is that both the economy and the housing sector in Spain continue to depend on how the pandemic evolves domestically and internationally.
However, the optimism that has been the bedrock of the Costa del Sol real estate market over the past few years has not been hampered by Covid and is expected to continue in 2022. A positive outlook on the real estate market in Spain and Andalucia will continue making it a top pick for investors.
After the pandemic hit, the Spanish real estate sector is recovering strongly
According to international real estate consultancy Knight Frank, the United Kingdom, Germany, France, the Netherlands, and Spain will be the leading investment destinations in Europe, the Middle East and Africa over the next year. Their experts' forecasts, Spain will receive investment in real estate close to 7,500 million euros.
This forecast is one of the findings of the 6th edition of the Active Capital report, presented by the company, which analyses the markets and capital at a global level and summarises the company's global real estate predictions for the next investment cycle.
Are we heading for another housing bubble?
Ricardo Amaro, a senior economist at Oxford Economics and property market expert, states, "house price growth has gone from rapid to lightning-fast in the Eurozone, defying predictions during the pandemic-driven recession. This impressive momentum will continue until 2022. We anticipate that house price growth in the Eurozone will rise to 8% year-on-year in the fourth quarter of 2021, a growth not seen for 30 years".
Differences with 2007
Nowadays, interest rates on loans are generally fixed for more extended periods, and therefore the risks are unlikely to arise from homeowners who cannot repay their loans. However, when the Spanish housing bubble burst in 2008, the brunt was felt nationwide. More than 97% of mortgage loans had a variable interest rate, so the higher interest rate level developed faster than other countries. As a result, thousands of mortgaged families could not afford to pay their mortgage and could not sell their houses without continuing to owe money to the bank. This time around, the Spanish housing market is among the most solid and sustainable, and banks are more prudent in granting credit.
The CaixaBank's real estate clock points to a much shorter cycle than the one experienced since the housing bubble burst in 2008. In 2022, according to their forecast, the residential market will return to an upward path, with growth in prices and house sales. However, unlike the previous cycle, which lasted eight years, the property market will now return to growth in half the time.
The future is bright
The pandemic economy pushed Malaga's competitive housing market into such overdrive that a defining marker of wealth — the million-euro home — has become the norm in a growing number of resorts. Properties worth €1 million or more now dominate municipalities from Benahavis to Estepona and Marbella. Moreover, the proliferation of high-end villas and apartments shows that the price point is not a stretch for a growing number of foreign investors.
Against all odds, house prices have withstood the economic turbulence during the worst months of the global pandemic. Now, with the economy snapping back, prices are continuing to rise. At the end of 2021, house prices are expected to grow at the fastest pace in three decades and continue well into 2022.