An Outlook on the Spanish Property Market in 2024
December 21, 2023
Following a good performance in property sales in Spain during 2023, the end of the year saw a slight dip in transactions on the Spanish property market. However, the resilience of property prices and the consistent uptrend in various regions since January offer promising indicators for 2024. With interest rates holding firm, the question looms: What lies ahead for Spain's property market in 2024? Well, let’s take a look.
Reflections on 2023
Despite interest rates reaching 4.5% in 2023—a historical harbinger of slowed house price growth—Spanish real estate appears to have defied this trend, maintaining its value. The Tinsa property index reports a 4.3% rise in prices for the year to October, with notable increases in the Balearic and Canary Islands.
The predicted price drops that many anticipated would occur in 2023, failed to materialise. Instead, property prices actually increased by 7% over the year, with the dynamic markets of Madrid and Barcelona experiencing extremely high price increases.
Overall, 2023 looks set to end at just below 600,000 transactions in total, representing a drop in transactions between 8% and 10%.
Projections for 2024
With the European Central Bank (ECB) holding steady on interest rates, the mortgage market in Spain is expected to remain tight—a pivotal factor influencing property prices. The number of mortgages signed in 2023 has fallen significantly and is expected to close with a drop of more than 25% year on year.
However, thanks to the French senate’s move to discuss the option of allowing British second homeowners in France the right to a long-stay visa, the news that Spain is looking to do the same has given some much-needed hope to those Brits looking for a property in the sun.
UK-based international property portal, Kyero, has said that there is ‘pent up British demand’ for property in Spain, as British citizens await a potential relaxation in the 90-day ruling. This news could potentially mark the start of a renewed demand from British citizens looking to buy property in Spain in 2024.
Foreign Buyers Continue to Boost the Market
Digital nomads and affluent retirees from outside of Spain look set to continue to dominate the property market in Spain. The mix of rich culture, great healthcare, safety and a mild climate make Spain a top choice when it comes to buying property abroad. In the third quarter of 2023, foreign transactions accounted for just over 15% of the total property sales, the second-highest level in history.
Supply Outstripping Demand
Low property levels in 2023 look to persist as a constant in the Spanish property market for 2024. This chronic shortage of supply highlights the need for adaptive strategies across the country. For rental properties, with the introduction of the reformed Housing Laws in Spain earlier this year, many landlords are now favouring short-term or holiday rentals over long-term rentals. This, in turn, has caused a drastic shortage of properties nationwide, but particularly in the popular Spanish coastal resorts and other highly sought-after areas.
However, some experts also believe that this unprecedented demand for property may end up exhausting itself by the end of 2024, helping to moderate prices and offer more opportunities for property purchases.
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