A year of pandemic Evolution of the real estate sector in 2020
2020 has been a very complicated year with the coronavirus crisis, this has had a clear impact on the evolution of the real estate sector and we have been able to see how everything was changing. This weekend it will be just one year since they declared the first State of Alarm and we began the confinement, today is the perfect time to make an analysis of how it has affected the evolution of the sale and rental market. Let us begin!
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Evolution of the real estate sector: purchase and sale
The end of 2019 and the beginning of 2020 suggested a year with a certain moderation in prices, but on March 14 everything changed . The State of Alarm and containment measures caused many transactions to stop.
A big problem that many people ran into is that their big plans to buy a home went awry. The labor and economic situation of many Spaniards has given a radical change and profiles that were previously stable and solvent, now they do not grant them any type of financing because they are in an ERTE or unemployed.
In addition, it must be taken into account that Spain is a country that focuses mainly on tourism and in 2019 12.5% of all transactions were made by foreign buyers. In 2020 it has been reduced to 6.4% and beyond buying and selling, it has also had a great impact on all sectors and on rentals, especially for tourist and coastal cities.
2020 figures and the covid-19 crisis
But how does this translate into figures? Well, in the first three months, we were able to see a big initial drop of 47% in transactions . Data from the National Institute of Statistics (INE) show a global drop in sales in 2020 is 17.7% with 415,748 operations.
We have talked about transactions, but what about prices? Initially, decreases of 6-9% were expected, but finally, in the total balance of the year they have not been so drastic and second-hand housing managed to recover 1.5% in the last quarter of the year , reaching a 0.4% compared to 2019 and with a quarterly variation of -1.1%, according to INE data.
It must be taken into account that these data are relative and depend on the autonomous community, since there are areas that have been more or less affected.
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New build vs second hand
It should be noted that within this drop in real estate transactions, there has been a notable difference between new construction and second hand.
During the months of confinement the construction had a great fall, since all the works were stopped. After this time, it has been reactivated relatively quickly and although new projects have been paused due to the uncertainty of the evolution of the pandemic, interest in the new work has increased . While second-hand properties had a slight drop in prices, new construction has become more expensive by 8.2% during the last 2020.
Evolution of the real estate sector: rentals
According to the global data that we have been able to see from 2020 and the forecasts for 2021, the real estate rental market has not been as affected as that of the sale of homes.
Figures for the rental real estate sector in 2020
Depending on the area of Spain, we have been able to see more or less substantial falls in the price of real estate, with drops of 2% in rental prices. In general, we have been able to see a drop in rents in cities like Barcelona with 17.3% less or Madrid with a drop of 12.6%. This can be due to different factors:
- Highest prices. Large cities or areas such as San Sebastián, have very high rents that do not correspond to the salaries that there are. This creates that many people cannot afford to rent in the city and the current job market has made this situation more evident.
- Youths. The age of young people becoming independent is increasingly late due to low salaries and few job opportunities.
- Many sectors have been seriously affected and many people are in ERTES or unemployed. This has created a situation where many have been forced to search for cheaper rents or even return to their parents' home.
These points have meant that the most expensive cities in Spain have suffered the greatest drop in rents after the health crisis.
Still, we won't see such a noticeable impact on rents. The low capacity to save and the job and economic instability do not allow having a good profile to take out a mortgage , so rents will continue to be the main option for many families.
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