Will house prices in Barcelona continue to fall? Is it better to buy now or wait? Do I sell my apartment as soon as possible at a higher price than in the next few months? These are the key questions in the real estate market and the ones we receive daily at Bcn Advisors. Although prices will continue to adjust throughout 2021, we’ve never seen such good mortgage conditions before, something that could change at any time.
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.
The figures from the second half of the year are expected to be even more stark. 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 dramatic 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% according to idealista.
“Currently there is still some uncertainty about how things will develop,” comments Francisco Nathurmal, CEO and founder of 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 international buyers’ market has been slower due to the travel restrictions but the local market has been more active due to low interest rates and more opportunities to negotiate. Some local buyers are also making the most of Barcelona without foreign clients who sometimes put in higher offers than local buyers.”
Reasons to sell your Barcelona home
In a sellers’ market, the demand for homes outstrips supply. Historically low interest rates and increasing numbers of homebuyers seeking a lifestyle change could soon create a robust sellers’ market.
After months of being told to ‘stay at home’, many people – especially those living in the cities – are ready for a change. They are searching for more spacious homes close to nature and with more lifestyle amenities. These buyers are the ones ready to make a purchase and sellers in these areas should take note.
“During these unusual times, purchasing a home has become more of an emotional decision. This is not just a time where buyers think about where they are going to spend their free time or time with family but also where they may be working for the foreseeable future,” adds Nathurmal.
If the health crisis continues longer than expected, banks could tighten their mortgage conditions resulting in fewer buyers – another reason why sellers might want to consider putting their homes on the market.
In order to get the very best price possible, sellers should also spend some time preparing their home for sale. During lockdowns many people took advantage of the time to tackle home projects, giving them a head start on the home-selling process.
Reasons to buy a home in Barcelona
Forecasters are predicting that Barcelona property prices 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% (idealista).
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.
Investors and cash buyers may still be waiting for ‘bargains’ from expected price drops but 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 factors such as location, communication, infrastructure, people, culture, prosperity and education.
In recent years the Catalan capital 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.
Although there has been controlled capping placed on rentals in certain neighbourhoods across the city, the wider economic unrest and market uncertainty means that bricks and mortar will continue to be an attractive safe haven for investors.
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.”
Average property price per square metre of European cities