Whether for personal use or as an investment, Spain is a popular destination for foreign nationals looking to buy residential or commercial property. Reasons for this include its convenient location and membership in the European Union, pleasant weather, plenty of coastline, relatively low cost of living and affordable Spain real estate prices. If you are looking to pick up a property in this country to expand your business or as a rental property or other investment, make sure you consult an experienced legal professional to help you navigate the process of buying real estate in Spain and everything that it entails, including how it might affect the taxes you owe.
Real estate prices in Spain over the last decade
Property values on the rise steadily since market recovery began in 2014, although prices are still 36% lower than their pre-recession peaks. The International Monetary Fund has recently warned that the growth seen over the past three years has been excessive and suggests the market is at risk of overvaluation, but the head of Spain’s central bank says the situation is far from pre-crisis levels and that they are closely monitoring the situation. It is important to note that the 2008 bubble was largely fueled by easy access to mortgages, whereas today the banks are being much more careful in their lending.
Today, Spain’s real estate market is starkly divided into exceptionally high-performing areas, below average regions and even “ghost towns” where half-built residential developments have been abandoned by developers who lost everything when the bubble burst. Real estate prices in Barcelona and Madrid rose 6.5% and 8.3%, respectively, in the first three quarters of 2018, while other areas like Salamanca and Ourense were down 3.1-3.6% over the same period.
Spain real estate prices for 2019
Rents are rising as homeownership rates decline, bad news for residents living on limited incomes but potentially good news for property owners. Given this situation, most real estate investors’ plan for the foreseeable future is to rent out their properties because fewer people can afford the rising cost of buying a home.
In booming markets such as Madrid and Barcelona, real estate prices and the number of new building licenses granted are expected to continue to rise throughout 2019. Industry experts are predicting a price increase of 5-7% in 2019 with healthy demand from both Spanish and foreign buyers. Regarding the latter, it remains to be seen what effect Brexit will have on sales to British homebuyers in Spain. Historically, they have been the largest group of foreign buyers in Spain. But the country’s best-performing markets are still expected to continue growing thanks to German, French and Scandinavian nationals.
Real estate prices in Barcelona, Spain and other cities
National average price for residential properties €1600 per square meter. Real estate prices peaked just before the financial crisis in the first quarter of 2008 at €2100 per square meter, after which point they went into freefall until the bottoming out in the third quarter of 2014 at €1456. This overall trend tracks with the number of property transactions, which peaked at over 900,000 yearly transactions before the crisis and dropped to a low of barely 300,600. By 2018, those numbers were back up to around 600,000 transactions and still trending upward.
Regions above national average include: Community of Madrid, Balearic Islands, and Catalonia (including Barcelona). The most expensive real estate prices in Spain in 2018 were Gipuzkoa (€2609/sq. meter), Madrid (€2497), Basque Country (€2339), Barcelona (€2319), Vizcaya (€2294), Balearic Islands (€2263), and Catalonia (€1961). On the other hand, the cheapest real estate prices in Spain in 2018 were Basin, Ciudad Real, Teruel, Jaén, Toledo, Cáceres, Ávila, Estremadura, Zamora, León, Badajoz, Castilla-La Mancha, Lugo, Albacete, Ourense, Segovia, Murcia, Palencia (all less than €1000 per square meter).