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Momentary Stabilization of The Spanish Real Estate Market

Momentary Stabilization Real Estate Market

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As per several studies Lexidy has had access to, regarding the real estate sector in Spain. We are able to anticipate a change of cycle. After years of continuous expansion, the market appears to be experiencing a momentary stabilization  in Spanish real estate 


The most recently obtained data supports this prediction. For example the case of the mortgage granting statistics. Which has shown a sharp fall of more than 22 percent during the month of September of this year according to Bloomberg. In this setback, the influence of the entry of the new Spanish Mortgage Law can be seen (as per the Law 5/2019, of 15 March) regulating real estate credit agreements.

 

Said law lengthens the procedures for granting these loans, given that they are now more demanding. But experts also detect the influence of the economic slowdown and institutional instability which inevitably weigh on investment prospects. It is normal that these factors influence the real estate market. Considering the recent market awakening has been very different from that experienced in the past. The boom had nothing to do with a credit boom, but was owed to much stronger impulses:

  1. Increasing rates of employment 
  2. Economic confidence. 

What does this mean ?

This certainly leads to assume that the growth in the sector is becoming much more sustained than what it used to be. Similarly, there is no reason to expect the change in the real estate cycle to show the virulence that we all experienced in the past and shocked the entire market.

Indeed, a change of cycle is approaching. A change that is consistent with the current situation and way more moderate than the previous one. It is now likely that the correction will focus on the three areas where demand has traditionally been the highest:

  • Barcelona
  • Madrid
  • Coastal areas

It is, therefore, a stabilization that matches with the new economic situation that Spain is going through. Corroborating in this manner, that the real estate sector is now developing steadily, free of excesses and bubbles.

To sum up, we can confirm that the new legal framework including :

  • Mortgage procedure
  • Solid growth in economic terms,
  • Strong reduction in the unemployment rate.

Are the key factors that enables us to believe we are facing a more sustained growth in the short and medium term, far from the times of speculative fever where the real estate bubble inevitably burst.

Want to know more about this Momentary Stabilization in the Real Estate Market?

Our experienced Real Estate lawyers are ready to help you. We understand real estate in Spain can be challenging. Lexidy is here to offer our full support as your legal trusted partner. If you’d like to know more, contact us here


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