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It is a fact that in the past year of 2021, the real estate market in Barcelona and specifically the residential sector, was able to overcome the standstill caused by the pandemic crisis of Covid-19 and rebounded strongly with spectacular growth figures in the number of sales and purchases. Not only that, but it surpassed the levels of sales and purchases in 2019. The figures indicate this, if we take the data on sales and purchases as a reference:
According to the INE, it shows that July 2021 closed with a total of 50,258 sales and purchases, a year-on-year increase of 53.5%. The highest figure since April 2008.
If we compare the same month of 2019, we see that there is a rise of 4%, therefore, we have surpassed the data prior to the pandemic.
In the Barcelona capital market, the number of sales and purchases in Q2 2021 stood at 3,464, a (+37%) year-on-year, when in the same period of 2020, 2,179 sales and purchases were closed.
The average sale price per square meter in Barcelona in November 2021 stood at 3,918 €/m2, an increase of +0.3% compared to the previous month, October; and a decrease of -3.0% compared to November 2020. (source Idealista)
To understand the behaviour of the market at the moment, this large increase in year-on-year sales and purchases must be contextualised, as it is probably due to operations that were postponed during the state of alarm and then reactivated from July 2021 onwards.
Another factor is the increased savings capacity of Spanish families which, according to data from the Bank of Spain, deposits of Spanish families have increased by 10%, this, added to the low cost of mortgages, also taking into account that the level of prices is still under control.
All this, together with the changes in housing preferences of Spanish families as a result of the pandemic, as they tend to look for properties with terraces, gardens or spaces adapted for teleworking.
The year 2021 ended with the general impression that prices were practically stable.
Everything suggests, therefore, that Barcelona’s real estate market will continue to revive, as does social and economic activity in general, as well as the mobility of citizens between countries and the arrival of international investors.
This panorama has contributed to the general reactivation of home sales and purchases.
The inevitable question is: What will Barcelona’s real estate market be like in 2022?
An unquestionable fact is that the real estate market in Barcelona continues to depend on the economy in general and on the performance of the covid-19 in our country and in the world.
For the reasons mentioned above, everything points to a continued recovery in demand and sale and purchase prices this year.
Buying and selling market in Barcelona
Will the sale and purchase price of housing in general go up or down?
At Proddigia we foresee that all this means that the price of housing in general in Barcelona will not experience price increases of more than 5% in its best areas.
It is even possible that in some of its neighbourhoods there will be price decreases, which we estimate will not exceed double digits.
However, there are a number of variables to take into account. We continue to monitor the evolution of the pandemic and the pace of vaccination, which seems to be under control. In the coming months, for example, and in a more cyclical manner, inflation and the rising cost of raw materials may influence price increases. On the other hand, uncertainty over the new housing law, which was approved at the end of last year, or the management of the European Next Generation Funds and a growing inequality between supply and demand, with a worrying lack of stock. These are challenges facing the sector that may generate uncertainty and slow down the market’s upward growth path.
Rental market in Barcelona
What about rental prices?
Prices have fallen by around 10% in Barcelona since the law regulating rental prices in Catalonia was passed just over a year ago. The districts that have experienced the most notable drops are Ciutat Vella, l’Eixample and Les Corts.
The correction in rental prices is more likely to be due to the natural adjustment of the market caused by the pandemic than to the Generalitat’s interventionist law, as this trend has also occurred in Madrid with -9.3% and in other Spanish cities where the rental market has not been regulated.
In the Barcelona city market, the price in the second quarter of 2021 was -6.4% year-on-year, at €13.1/m2. (Source Ajuntament Barcelona)
The rental market, and specifically in Barcelona city, is suffering an ordeal, following the “effect of the rent control law”. Far from the objective pursued by the Generalitat with this measure, just over a year after the law was passed, the Barcelona market is suffering a 40% drop in the supply of rental housing and a 16.6% drop in the number of signatures. (Data from Agència de l’Habitatge)
Many owners have decided to sell their homes instead of renting them out. Other owners use other formulas that allow them to maintain the same levels of profitability and minimise risks, and opt, for example, for seasonal rentals instead of traditional rentals.
As a result, the housing stock has been significantly reduced and demand has tightened, so that the limitation is not one of price but of access to housing.
This interventionist situation in the market in Catalonia, and specifically in Barcelona, has led to legal insecurity and to investment seeking alternatives in other cities.
Another of the variables that has influenced the rental market, and which has occurred as a result of the pandemic, is that families’ housing preferences have changed: the search for larger spaces, gardens, terraces and an area adaptable for teleworking, with peripheral locations being an opportunity to find a more attractive and economical offer.
This shift towards these areas has also influenced prices in the capital to fall.
What will happen in 2022 in the Barcelona property market?
At Proddigia we believe that there will still be another downward price readjustment in the rental of properties in Barcelona city, however, we believe that it will not be a sharp decline.
This forecast is based on the fall in rental prices in Spain. In general terms, this has fallen by 6% year-on-year to an average price of 11 euros/m2/month, according to the price report published by idealista.
In our opinion, the trend will continue, although we estimate that it will be around 5%.
On the other hand, we will have to see if part of the demand that has left for neighbouring areas after the return to normality and the return of many companies tends to return to the big city.
Also, as mentioned above, supply will continue to be affected by the current price regulation law, as many landlords will not pass on inflation in order to maintain their contracts, which in practice means a decrease.
Therefore, we estimate a decrease in the average rental price for housing in Barcelona in 2022.
Finally, we will have to see the final measures that will be approved in the new Housing Law at the state level and how they will affect the rental market.
