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Coronavirus: The effect on the property market in Spain!

Before the Spanish economy rocked by the coronavirus in 2020, Spain's property market was highly demanded. It is a popular destination for many foreigners because of the Mediterranean climate and the prosperous ex-pat culture. Studies have shown that the UK were the top Spanish property buyers between December 2019 and January 2020.

But although development on the Spanish real estate market stopped during Spain's first lock-down of coronaviruses, demand began to increase with the relaxation of restrictions. During summer months the number of virtual viewings on Spanish property was substantially greater, with coronavirus fueling considerable international demand for a position in the sun. 1 bedroom apartments for sale

In 2020, Spanish property prices increased by 1.6 percent after a decrease in 2019. In spite of COVID-19 and post-Brexit issues, after some unexpectedly optimistic moments for Spanish property in 2020, international demand for 2021 also appears to increase.

Modern apartments in Spanish
The Spanish Property Market

In 2019, expat buyers and sellers who wanted to relocate abroad or return home prior to the imminent Brexit deadline encountered robust activity on the Spanish property market.

Many Britons were unsure about their future after Brexit in Spain because of the insufficient assistance and lack of contact between the British and Spanish authorities.

The main problem for UK purchasers who are searching for a property in Spain was the news that UK travellers could only stay free of visas in the EU for 90 days within 180 days. With free movement being a thing of the past, new legislation means that UK residents will only be able to spend time in holiday homes from 2021 on.

It is estimated that the British population is between 500,000 and 1 million in Spain, although not all British people have registered as Spanish citizens. Because of fear, citizens returned to the UK on Brexit to escape consequences leading to lower British demand for Spanish property.

However, in 2021, Brexit and COVID-19 do not seem to dampen British hunger for Spain. Taylor Wimpey Espana announced a 39% rise in virtual viewing of Spanish properties in the first week of 2021, with specific areas of interest being Alicante, Mallorca and Costa Blanca.

Kyero, an online property website, has also shown a 446% rise among young Britons between the ages of 18 and 24 who view Spanish property on their platform. It is believed that many young people have now gone from freedom of movement to fight this by being Spanish citizens.

Optimism of Spanish Property Market

The Spanish property market outlook for 2021 is hard to estimate because of COVID-19's continuing uncertainty. Although the deployment of vaccines for coronavirus is encouraging, restrictions continue in Europe, and the efficacy of the vaccines remains a mystery.

The Spanish property market accounts for 16 percent of foreign buyers. Based on ethnicity, the British accounted for 14% of the international market share in 2019, the largest community of foreign buyers, while the downward trend continues. The number of UK buyers decreased by 14.3 percent compared to the market share of 2018. In the first half of 2020, transactions by British citizens were estimated to be 41.1% lower than in the first half of 2019.

The major cities like Barcelona and Alicante, where prices have risen sharply, showed significant declines in buying in January 2020. Although, in each area, properties in the Canary Islands, Almeria and Murcia had strong sales growth according to the Institute of National Statistics (INE) in January 2020.

Mallorca Luxury House, Spain ( Balearic Islands )

Coronavirus and Expat Buyers and Sellers In Spain

Spain has been one of the worst affected European countries by coronavirus. According to Worldometer, Spain had 2,774,014 cases of positive and a death toll of 57,291 on 26 January 2021.

The Spanish government ordered a national lockout to curb the spread of the virus, so that no-one could leave their homes except for the store, the hospital, or for the treatment of the poor and elderly. Businesses and restaurants had to close, traffic restrictions were in place and the police fined anyone who didn't have a reason to be outside.

The tourism and travel sector was seriously affected by the 2020-21 lock-up, and expats who depend on rental income or want to sell and move are also suffering.

Property rentals are a thriving market in Spanish and because of the high financial returns available, many expatriates allow their homes to travelers. However, international travel restrictions and border closures have adversely affected rental incomes and visitors cannot travel.

Future of the Spanish market for property

While the pandemic of coronavirus has caused a shock for the Spanish housing market, it is a crisis that has passed.

The Bank of Spain expects to remain fragile for some time in the domestic home market, but foreign investment will remain dynamic.

The life in Spain is appealing for the overseas buyer because of its success with visitors. For British people, the British market for Spanish assets is expected to rally in the aftermath of coronaviruses.

The fear in 2020 was that the coronavirus pandemic would dissipate demand on property, with locked-down countries and drastic social distance measures in place. However, COVID-19 seems to have briefly disrupted the development of the Spanish property market, rather than derailed it.

Recovery may be sluggish, but the future of the Spanish property market remains hopeful.

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