Spain is currently facing a scenario of restained property prices and easy access to financing before a period of high inflation.
Covid-19 struck a blow to the world economy, drawing a bleak outlook in hospitality, commerce, and tourism. However, predictions are optimistic, as the vast economic disaster of 2020, unprecedented in history, will become an undesirable event of the past, as vaccinations progress and group immunity is achieved, to a stage of growth in 2022 in the Spanish economy that is also unprecedented, with a GDP expected rise of above 6%.
Several elements represent the current economic movement and represent investment prospects unknown in recent decades:
- High growth after a time of sharp decline in GDP
- Financing at historic lows
- Price inflation
So why invest in Spanish Property in 2021 - 2020?
The experts' forecasts are very promising: the property sector will be one of those leading the economic recovery in Spain. Investing in any real estate assets (whether a property, building plot, or commercial premises) has traditionally been the most reliable option to hedge against inflation. This current situation makes real estate investment a desirable choice. Carry on reading to find out why.
Prices have adjusted
We are at the start of the intense recovery of the Spanish economy. The Bank of Spain and The European Commission have indicated that the economic boom will be more potent than initially anticipated, with production growth above 6% this year and next. The growth will start in the latter part of 2020, as vaccinations continue to increase and improve and activity recovers.
The Government's goal is that 70% of the population aged 16 years and over, resident in Spain, will be immunised by the 30th September 2021. To achieve this figure, 3,000 daily doses must be given for every 100,000 inhabitants. The current rate is considerably higher, as around 5,100 doses per 100,000 inhabitants are administered every day.
The advance of vaccinations, the increase of epidemiological data, and the end of the state of alarm are having a positive impact on the nation's confidence and the recovery of business sectors.
House prices forecast
In 2020, house prices, after an upward trend that began in 2013, adjusted, and exciting investment opportunities have emerged. According to sector forecasts, in 2021 and 2022, house prices in Spain are expected to rise above 4%. Therefore, we are still facing contained price levels in the real estate sector, unlike in other property markets such as the United States, where prices have already started to rise sharply, driven by high inflation.
Protect against an extended period of high inflation
Insitute of Economic Studies (IEE) points out that inflation in 2021 will continue to be highly determined by the cost of oil and energy products, in general. In 2021, the CPI (Consumer Price Index) is expected to end the year between 2% and 2.5% in year-on-year terms. In the United States, in June, inflation reached 5.4%, the highest rate since 2008. In the UK, it climbed to 2.5%, the highest increase since 2018.
Therefore, a property investment guarantees the value of consumers' savings compared to other alternatives such as financial investments or keeping the money in a savings account in an inflationary environment.
Ease of access to finance
In addition, financing also facilitates real estate investments. Purchasing a home usually requires external funding and, today, its cost is relatively low. Mortgage credit remains at historically low levels. After the 12-month Euribor, the primary mortgage benchmark index closed in 2020 at almost -0.5%, the lowest rate in history.
This situation facilitates the financing of purchase operations at competitive prices compared to recent years, with great opportunities to acquire both a fixed rate and a variable rate mortgage at historically low levels.
Therefore, we have a perfect combination to make real estate investment an ideal option to protect savings.
As we have seen, if you are thinking about buying a Spanish property, now is the perfect time to be on the lookout and identify opportunities as they arise.
If you would like our assistance in alerting you to excellent real estate investments, contact us. Once we know your requirements, we will inform you of current opportunities and let you know as soon as exciting new offers arise.