Spanish real estate chains: 11 months of continuous growth!

Spainrecorded 11 consecutive months of price increases inreal estateEach subsequent month has been stronger than the previous one, with no signs of slowing down. After the official “end” of the Covid pandemic, buyers rushed to buy properties in theSpain. Spanish savers have collected about 944 billion euros in bank deposits in the last 2 years (when the government restricted our spending). This is the largest amount in bank savings in Spanish history!

There are several reasons behind this buying trend besides record levels of savings. Chief among them are the unstoppable inflation since 2021, the global supply chain situation caused by a virus that is still causing new outbreaks, and the illegal invasion of Ukraine, all of which have exacerbated and intensified the inflation problem around the world. As a result, we are facing double-digit inflation that is eating away at bank savings. Savers are understandably worried. We haven't experienced inflation this high since the 1970s, at the peak of the Cold War.

Central banks have announced that they will “moderately” raise interest rates in the coming quarters, so now is the best time to take out a “cheap” mortgage, as it will become more expensive over time. Adding to this is the sharp fall in cryptocurrencies in recent months, shorting most of them, savers are buying real estate like tomorrow is the end of the world.

This has caused a veritable boom in purchases (especially in the major cities and coastal areas of Spain), which has taken real estate prices to new heights, echoing the last property bubble of the early 2000s.

ВMadridFor example, real estate prices have already reached an all-time high. Home prices have increased by an average of 8.4% year-over-year. TINSA, the largest appraiserreal estatein Spain, reports that overall real estate prices are still 22% below the peak levels reached in 2007.

This suggests that the real estate market still has plenty of room for price appreciation to reach previous record levels (with the exception of theMadridof course, who has already achieved them).Madrid- a separate case, as it attracts more than 80% of all foreign investment in theSpainbecause of its ongoing investment attraction activities and free economic and tax policies and deregulation, which creates an excellent space for investment.Andalusiaand Madrid, smartly pursuing liberal economic policies to attract investment (both national and foreign), have become two hotspots for investment in Spain. These are certainly the two regions in Spain where it is now easier to make money.

Spanishdevelopersare struggling to cope with the rapid increase in demand as construction material prices have risen sharply due to Covid's impact on the global supply chain, causing delays in delivery times. The sharp increase in construction material prices is forcingdevelopersraise the selling price, creating an ominous price spiral, increasing overall real estate prices. This creates market imbalances and price distortions, as it is now possible to find a secondary property (of exactly the same size and location) much cheaper than a new build!

No one dares to speculate how long this bullish trend will last. But what is clear is that the sharp interest rate hikes looming on the horizon will make adjustments to this buying mania, cooling the market. But for now, we are undoubtedly in a buyer's market segment.