The Spanish real estate market experienced a turbulent year in 2020. However, it faced it with much more solid foundations than in the previous crisis of 2008, which foresees the next few years full of opportunities for buyers in Barcelona property market. Bcn Advisors, a luxury real estate agency in the city, reviews the impact of the Covid-19 pandemic in the sector and predicts the evolution in 2021.
Like every other major world city, Barcelona’s property market took a major hit during 2020 due to the ongoing health crisis. According to Spain’s National institute of Statistics (INE), the number of sales transactions in the first half of the year fell by 23% from 29,256 sales to 22,541 sales in Barcelona Province.
Most forecasters believe there will be a pick-up in sales towards the second half of 2021 once a vaccine for Covid-19 has been rolled out across the country and international buyers start to return to the city.
Despite the fall in sales transactions, Barcelona city property prices fell relatively slightly, following the trend of the previous twelve months. In the year to November 2020, prices fell by 2.6% and across the province by 1.3%.
“Currently there is still some uncertainty about how things will develop,” comments Francisco Nathurmal, CEO and founder of luxury real estate agency Bcn Advisors. “But on the positive side, deals are going through, particularly for properties located in the most exclusive Barcelona’s quarters and also for apartments with outside space in the centre. The buyers’ market has been active due to low interest rates and more opportunities to negotiate”.
Reasons to buy a home in Barcelona
Forecasters are predicting that prices of properties for sale in Barcelona will continue to decrease in the short term but they are expected to pick up again towards the end of 2021 when it is hoped that the health crisis will have eased. Prior to the current pandemic, prices were already adjusting, following two years of major hikes after prices had bottomed out – from 2015 to 2016 prices increased by 10% and from 2016 to 2017 by 12.7%.
Cash buyers and investors should be able to see a return on their investment in a not too distant future by taking advantage of the drop in prices by 2021, and from a long-term investment perspective Barcelona will continue to appeal. The international consulting firm Resonance recently ranked Barcelona eighth in their annual ‘The World’s Best Cities 2021’ report. It is not the first time that Barcelona appears in the ranking but this time the report takes into account new Covid-19 related factors as well as the usual ones such as location, communication, infrastructure, people, culture, prosperity and education.
Never has there been a better time to get a mortgage, however, with some lenders offering fixed rates of up to 30 years of around 2.15% above Euribor. Low interest rates mean lower monthly payments and therefore greater affordability, ideal for those looking to get onto the property ladder or those who want to upscale. Due to the economic downturn, lenders could become stricter with their criteria and the opportunity to obtain ‘free’ cash may be short-lived. If the lending criteria is tightened, some buyers will not be able to purchase the properties they want and this will push prices down, creating good opportunities for cash buyers.
In recent years Barcelona has been one of the biggest magnets for venture capitalists, mainly due to the growing number of FinTech industries that are able to employ people on lower salaries than elsewhere in Europe. In the long-term, cost conscious companies will continue to gravitate to business-friendly cities like Barcelona which offer low-cost workforces.
In short, Francisco Nathurmal concludes: “The current market is one of necessities. There are sellers who need to sell as soon as possible and others who will wait until the vaccine arrives in the hope that the market will improve. On the buyers’ side, it is the same issue – some buyers are taking a ‘wait and see’ approach in the hope that prices will fall further whilst others believe that this is a good moment to buy, especially with such good lending conditions”. The wider economic unrest and market uncertainty means that bricks and mortar will continue to be an attractive safe haven for investors.
About Bcn Advisors
Bcn Advisors is a high-end luxury real estate agency that provides solutions to the most demanding buyer and seller requirements. It manages residential and commercial properties for sale or rent in prime areas of Barcelona (Spain) and offers services for international customers, expats and executives.