Rising inflation coupled with low interest rates, a slowdown in new home construction and a weak second-hand housing market is driving investment in real estate.
Its appeal stems from its profitability, which is much higher than that of other assets considered safe, such as treasury bills, bonds and deposits.
According to data from the Bank of Spain, the profitability of housing (rent plus price variation) in the second quarter of 2021 stood at 7 percent.
For all this, “in 2022, investment in housing will be the greatest refuge against inflation,” says Ferran Font, director of studies and spokesman for piso.com.
Increase appetite for brick
Also Cristina Arias, director of the Tinsa Research Service, has detected an increase in investor interest in the housing market.
“Demand reflects activity above supply in an environment of low interest rates, which, together with uncertainty about inflation and the lower profitability of other financial products, make the real estate product an attractive alternative investment.”
This interest has meant that 2021 will close with more than 592,000 homes sold in Spain, 25 percent of them in Madrid and Barcelona.
Price increase of 9.5% year-on-year
The increase in demand has been reflected in the upward trend in house prices this year. According to Tinsa IMIE General and Large Markets statistics, housing rose 9.5 percent year-on-year in November.
“This evolution of the real estate sector is part of an environment of economic recovery in which demand reactivates faster than supply and puts prices upward,” says Arias.
Large capital, the most profitable investment
In this context, betting now on buying a home in Spain is a good option, says Lola Alcover, secretary general of the General Council of the Official College of Real Estate Agents of Spain.
And one way to make the purchase profitable is “to invest, whenever possible, in large capitals, where the high rental prices allow the owner to recover the initial outlay much faster,” Alcover argues. This profile includes regions such as Barcelona, Madrid, the Basque Country, the Balearic Islands, Malaga and Seville.
When planning an investment, the expert emphasizes the importance of calculating the real value of the property, that is, “the value that the market is willing to pay today for that property in the same place.”
A harmful law
The good performance of the real estate sector in 2021 may slow down in 2022 due to the threat that looms over the sector, derived from the new housing law. It introduces measures that can limit the rental price in declared “stressed areas”, especially for large landlords.
This law, according to Juan Carlos Higueras, professor at EAE Business School, is going to influence the real estate market, both in renting and buying and selling and “many investors are going to think twice before investing in housing, either to rent or to use it. as a second or third residence with which to channel savings and accumulate assets ”.