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If you’re keeping an eye on the Spanish property market, you’ll have noticed that things are busy. So hectic, in fact, that real estate transactions last year were their highest since 2007.
And there’s no sign of things slowing down this year. At the top of many buyers’ wish lists are new homes. As a result, new builds in Spain are more expensive than ever and in hot demand.
But are there enough to go round? Will the current supply keep up with this growing demand or will many buyers be disappointed?
A recent article on the property portal Idealista looked at these questions and concluded that the answer is probably no. Read on to discover why and what the situation is for new developments on the Costa del Sol.
The backstory to new builds in Spain
Before we move to Q2 of 2022, it’s worth glancing back at last year to put the current market into perspective.
Sales in 2021
In 2021, over 565,000 properties changed hands in Spain. That figure translates to a 35% increase in 2020 and ranks as the highest annually since 2007 (the height of the last property boom).
Resale properties dominated the market and accounted for almost 80% of all sales. Moreover, the over 450,000 resale transactions were the highest on record.
And while they represented just 20% of sales, new builds in Spain also saw a record year for transactions in 2021.
Sales in 2022
Fast-forward to 2022 and the trend appears to be continuing. Statistics for Q1 reveal that over 165,000 sales took place during the first three months of the year. In March alone, over 165,000 properties changed hands.
Furthermore, sales of new builds remain super-charged. They accounted for around 20% in Q1 and have not dipped below 8,500 transactions a month.
Demand higher than supply
But despite the bullish figures for sales for new builds in Spain, they still lag behind those registered in 2007.
While resale transactions in 2021 shot below their historic high in 2007, those for new builds were actually 65% lower.
Put simply, supply is failing to keep up with demand. Idealista finds that the shortage is most acute in Madrid and outlying suburbs such as Getafe and Pozuelo de Alarcón. But few places in Spain currently have enough new construction to satisfy demand.
Not enough new builds to go round
A look at the number of developments explains the problem. Idealista calculates that Spain needs between 150,000 and 200,000 new homes to meet demand.
For their part, the Spanish Association of Developers (APC) put the figure slightly low at 120,000 to 150,000 units.
Regardless of the difference, both estimates are way ahead of the actual builds taking place. According to the Spanish Ministry of Housing, 108,318 new-build licences were issued in Spain last year. That’s 12,000 short of APC’s lower estimate.
And there’s little sign of the situation improving in 2022. On the contrary, rising construction costs have put the brakes on many projects in the pipeline and many analysts predict a slowdown in land transactions.
The imbalance between high demand and low supply inevitably leads to pressure on prices and as a result, the values for new builds in Spain have risen steadily over the last few years.
In 2021, they reached their highest ever when the average price reached €255,428. This is 33.3% higher than in 2007.
As usual, there are significant regional variations. While new-build prices fell in some parts of Spain – for example, in Castilla-La Mancha, they’re 15.5% lower than in 2007 – most regions saw big upticks.
The highest was on the Balearic Islands, where they have risen by 145.8% in the last 15 years.
New-build market on the Costa del Sol
As the cranes on the skyline testify, plenty of new construction is taking place on the Costa del Sol. Much of it centers around Estepona, Marbella and Mijas with pockets in Benahavis and Casares.
The Costa del Sol is also currently the scene of cutting-edge developments such as these luxury villas in Puerto Banús or the iconic apartments and penthouses at The View. And at Realista, we know there’s more to come in the pipeline.
Pricewise, values have risen, but our portfolio showcases a range of prices from just €155,000 to several million euros. This variety proves that there truly is something for everyone on the new-build market on the Costa del Sol. And we think there is enough to go round. At least for the moment.
So, if you’re looking at buying off-plan property on the Costa del Sol, don’t leave it too late. Get in touch now with your requirements and we’ll find the new build to suit you.