The residential market in Spain has maintained a high level of activity during the first half of 2022, with an increase in sales of 16% and 36% compared to the average of the last five years. This is reflected in the Residential Market in Spain report prepared by Savills. With regard to prices, they have registered an increase of close to 4% since the beginning of the year, which represents a year-on-year rise of 8%.
After a 2021 with more than 600,000 homes sold, the highest figure since 2008, in 2022 sales have continued to grow and those of the first half of the year have marked the fifth highest historical record for a first half of the year and the highest since 2007. The ten cities in Spain that top the sales ranking account for more than 18% of total sales. These include Madrid, which leads the ranking, followed by Barcelona, Valencia and Seville.
In relation to the imbalance between new and second-hand sales, practically 90% of sales are made on second-hand product, exceeding the historical average of 70%. This situation is mainly due to the lack of land for new developments.
Supply of new construction
In any case, during the first quarter of 2022, development activity continued to grow compared to 2021, when 100,504 housing starts were recorded, the highest figure since 2008. Although official data is not yet available, a slowdown is expected as some projects have halted the start of construction pending an improvement in market conditions due to rising construction and financing costs. At present, futures on construction materials show a significant downturn, which seems to anticipate further adjustments and less pressure on the residential production chain.
The top ten cities in Spain that top the sales ranking account for more than 18% of total sales
The province of Madrid accounted for 21% of all housing starts in Spain in 2021, with 20,605 units. The provinces of Barcelona, Seville, Malaga and Valencia complete the top five positions, with significantly less activity than Madrid. Of the total number of housing starts in Spain, at least 7% will be destined for the rental market.
Price trends
The positive trend initiated in 2014 continues, with growth of just over 6% in 2021. This trend has accelerated in the first half of 2022, with year-on-year growth of around 9% for new housing and 8% in the second-hand market. Supply shortages and strong levels of demand have been the main reasons for this development.
Foreign demand
Foreign demand also broke records in 2021 with 102,990 homes, of which 43% were purchased by foreigners not resident in Spain. As usual, British buyers bought the most homes in 2021, followed by German and French buyers, all of whom are holiday or retirement home buyers. During the first part of 2022 the ranking of foreign buyers has remained the same, with British, German and French buyers leading the way.
The Savills report concludes that the limited supply of new-build properties, together with a demand that, although not as strong as in previous years, will continue to be very active, will enable good sales levels to be achieved. The consultancy firm estimates that more than 560,000 units will be sold in 2022, above the historical average.
