Spain | Real Estate Outlook December 2020

The sale of homes and the signing of permits suffered a notable correction during the months of confinement. This resulted in a drop in residential prices in 2Q20 and 3Q20, the first time since 2015. The correction could continue in 2021, although a recovery is possible towards the second half of the year.

Key points

• Key points:
• Monthly house sales are at around 2019 levels, after the correction suffered during the first stage of confinement at the beginning of covid-19. However, in the year to September, it still falls by 21.6% YoY.
• During the pandemic, the signing of mortgages decreased less than sales. In the first nine months of the year, mortgages fell by 16.2% YoY.
• The signing of permits contracted in the first nine months of the year due to the uncertainty surrounding legislation in the sector and the negative impact of covid-19. Between January and September 2020, permits fell by 23.6% YoY. 
• Housing price growth has been moderating in the first half of 2020. In fact, the MITMA series already reflects a year-on-year price decline in 2Q20 (-1.7%) and 3Q20 (-1.1%). 
• In 2021 the housing market will have both positive factors (the recovery of the economy and favourable financing conditions) and negative factors (the still high uncertainty, especially in the first part of the year, and foreign demand may take time to normalise). Thus, both sales and prices could fall in the coming year, although a recovery is possible towards the second half of the year.

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