Coronavirus could increase the value of homes in Spain with gardens!
Lockdown may have caused Spaniards to place increased value on owning space outdoors as well as indoors
There is already a widespread assumption that the coronavirus pandemic will have a negative effect on the Spanish residential property market, with sales figures being reduced to minimal levels during the emergency lockdown and prices likely to fall by around 10 per cent due to a drop in demand, but at the same time various analysts are anticipating a positive effect in respect of certain kinds of housing.
The probable fall in demand for property is due to a variety of factors, prime among them being a sharp increase in unemployment (and job security for those who are still working) and, especially in Mediterranean coastal areas, a lack of interest on the part of foreign buyers caused by the on-going restrictions on travel. But at the same time the lockdown has meant most of the population spending more time in the home than ever before, and with outdoor space being at a premium the preferences of home buyers could alter drastically all over Spain.
Over the last six weeks – and with the state of emergency prolonged for at least another fortnight – small balconies and terraces have become far too claustrophobic for many of those confined to their apartments, and as a result various experts forecast a sharp rise in the demand for detached, semi-detached or terraced properties with spacious patios or gardens. For decades the apartment has been king in the Spanish real estate market, but Covid-19 could change all that at a stroke as the population learns the value of owning space outdoors as well as indoors.
In recent months Spain’s notaries have reported that between 20 and 25 per cent of all purchases related to individual houses rather than flats or apartments – 21.5 per cent in the provisional figures for February of this year – but if these analysts are right then that proportion could rise significantly. In addition, of course, if the demand for properties with gardens does rise, that will place upward pressure on the market price.
At the same time, another consequence could be that more people will prefer to live outside the major cities, where almost all property tends to be high-rise. The outskirts could become more fashionable, a phenomenon well-known in cities such as London in the UK but one which would represent a considerable change in Spanish society.
As for properties on the coast, their attractiveness to non-Spanish buyers may be diminished by the limitations on travel (which are likely to continue in one form or another for a long time), but their rental value could rise as Spaniards consider their holiday options in 2020 and 2021. Assuming that by July and August it will be permitted to travel to and from the coast, those who might otherwise have been considering a trip abroad could opt instead for the short-term rental of properties on the Spanish Costas.
As with so many other aspects of life in Spain and the rest of the world at present, all of this is mere conjecture, and any predictions must be full of “ifs and buts”. In the short term, what is clear is that this year will see a serious downturn in market activity as a whole – although not as drastic as the collapse of 2009, despite the Banco de España forecasting a drop in real estate investment of between 7 and 13 per cent – but in the longer term, by next year (when investment is expected to rise again) the scenario could be full of bright spots.
This is especially the case for owners of detached houses with garden space, who could suddenly find that their properties are even more attractive to potential buyers who have learnt to appreciate the open air!