Spain | Is the housing market recovery sustainable?

Home sales have increased in the last year, far more than expected in an economy that saw GDP fall 10.8% in 2020 — with sector indicators offering plenty of evidence of the strength of demand.

Key points

• Key points:
• For the year to July, sales of houses and apartments were up 12.1% on the same period in 2019 — taking a benchmark period prior to the pandemic.
• In addition, the amount of new mortgages granted has recovered to levels not seen since 2010, and house prices grew again in the second quarter of this year (+2.4% yoy based on appraisal valuations).
• One reason that could explain this trend is the use of the savings accumulated during lockdown. With the end of the COVID-19 crisis, those households with greater job security, may have seen an opportunity to use these resources.
• Another explanation for the increase in sales is the change in household's habits during the pandemic. Due to the restrictions on their movement and doubts about how long the situation would last, people have had to spend more time in homes with little space.
• While in previous crises it has taken between 23 and 26 quarters for real estate prices to recover (in real terms) — this time it has taken only 7. A shortage of supply is another key factor, which, alongside the increased demand for investment purposes, will ensure that prices continue to rise.

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