The coronavirus continues to change everything it touches day by day. Although it is true that luxury is one of the sectors least exposed to crises, its activity in Barcelona is waiting for vaccines and the long-awaited herd immunity to return normality to the market. French, Italians, Russians, Belgians and British, the nationalities with the greatest presence in the foreign market of the Catalan capital, continue to analyze their investment possibilities from a distance when the borders open.
The current stabilization of prices and the absence of international demand opens a window of opportunity in the short term for the closing of operations that favors both buyers and owners.
Since the pandemic broke out, the luxury market in Barcelona has moved between 500,000 euros and a million, with average prices of 6,000 euros / m2. At this time, the real estate supply with prices above 2 million euros, which until the beginning of the crisis found potential buyers from abroad, does not find a buyer among the national demand, so its owners are forced to lower their prices or to resign oneself to not selling.
The data on the efficacy of vaccines at the beginning of 2021 have brought some optimism to the market, although there is still a long way to go until it returns to the new normal. Barcelona is, by far, the most desired Spanish capital for the purchase of main residences by foreigners who not only come to work, but are in love with the city and want to stay and live, so the absence of this Buyer or investor profile is being noticed in the number of transactions, but it also allows national demand to access the market with more competitive prices.
The interest of the local buyer for the acquisition of luxury homes in Barcelona is still very stable in the two main districts of this market, Sarria-Sant Gervasi and Eixample, which account for two out of every three homes for sale of more than 500,000 euros. The Eixample area accounts for 34% of the city's luxury offer, while Sarrià-Sant Gervasi and Pedralbes another 32% of the total.
The average home in the high-end market is sought as a main residence, it has around 150 m2, 3 bedrooms, 2 bathrooms and outdoor areas. Although refurbished or in good condition homes are preferred, the demand does not rule out acquiring properties to be refurbished as long as there are notable reductions in the sale price.
According to the monthly report on the sale prices of flats, second-hand housing in Catalonia in January 2021 had an average price of € 2,155 / m2. This figure represented a monthly cut of -0.33%. Year-on-year, it rose by 3.55%, being the second region that rebounded the most.
Catalonia is the second region that increases the price of housing the most compared to last year: 3.55%
Housing in Catalonia in January 2021 had an average price of 2,155 euros per square meter, falling by -0.33% compared to December 2020.
From one year to another, Tarragona (3.92%) was the seventh that increased the most at the national level. In addition, Girona (-1.41%) had the thirteenth most intense adjustment in the country.
Catalonia was the fourth most expensive autonomy, behind the Balearic Islands (€ 3,104 / m²), among Others. As for second-hand housing in Spain, in January 2021 it registered an average price of 1,715 euros per square meter, showing a monthly decrease of -0.23%. From one year to another, the registered figure marked a rise of 0.60%.
The price of housing in Spain continues to fall timidly from month to month, gradually assimilating the impact of the health crisis, as we had anticipated. Throughout the year it is to be expected that the percentages Thrown to fear the comparatives will absorb the Behavior of demand towards supply. Buyers are coming back onto the pitch very little by little. In exceptional situations such as the pandemic, the fear of aspects such as lack of employment does not help the security that must be counted on to take such an important step.
Given the different territorial sensitivities towards the housing market, we will see how factors such as the expansion of telework, the New Needs of space or the increase in the available supply influence more or less in some areas than in others. We must not lose sight of another variable such as Financing, since the Entities will look closely at the Loan Applications for the purchase of a home.
Barcelona was the second most expensive capital in the country
Monthly, Tarragona (0.35%) showed the only rebound among the Catalan provinces. In addition, Barcelona (-0.51%) registered the ninth most striking decline in the country. Year-on-year, Girona (8.57%) showed the second most relevant increase on the national scene. Tarragona (-0.77%) was the fourth Spanish province that least adjusted. In terms of prices, Barcelona (€ 2,410 / m²) WAS the fifth most expensive Spanish province. The cheapest in the region was Lleida (€ 1,076 / m²).
As for the Catalan capitals, Lleida (0.42%) recorded the most intense monthly increase in autonomy. Barcelona (-1.85%) was the second Spanish capital that fell the most in this period. From one year to another, Tarragona (3.92%) was the seventh that increased the most at the national level. In addition, Girona (-1.41%) had the thirteenth most intense adjustment in the country. With 4,438 euros per square meter in January 2021, Barcelona was the second most expensive provincial capital in Spain. On the opposite side was Lleida (€ 1,148 / m²), which was the fourth most affordable in the country.
The Governing Council of the European Central Bank (ECB) has decided to maintain its monetary policy stance and has frozen interest rates at 0.00%. These levels will be maintained until the inflation outlook solidly converges to a level close enough to 2%, "within its projection horizon," according to the institution.
The objective of the measure is to support the economy of the euro area, given the prolongation of the confinements. At the same time, it maintains the marginal credit facility at 0.25%, the interest rate charged to banks for overnight loans, and the deposit facility at -0.50%, the interest rate with the one that traditionally paid overnight deposits.
"The Governing Council expects the ECB's key interest rates to remain at their current levels or lower until the inflation outlook solidly converges to a level close enough to, but below, 2%, within its horizon of projection, and this convergence has been consistently reflected in the dynamics of core inflation, "reads the agency's statement.
The booming trend in 2021 is investment in housing as a safe haven. Low interest rates on financial products and the uncertainty caused by COVID-19 have benefited the real estate sector, where households and investors are betting on the purchase of real estate as long-term profitable assets.
Investment in housing as a safe haven, the growing trend
The purchase of real estate is presented as a safe, profitable and revaluable investment, which consolidates the idea of the property as a safe haven; This trend attracts traditional profiles such as households and investors and young people, previously dedicated to the rental segment.
The COVID-19 crisis and the uncertainty it has generated has impacted the economic sector and the stock market, notably sending the interest rates of the different financial products down. This situation has benefited the Spanish real estate sector, where households and investors see housing as an attractive asset in which to invest with long-term profitability, thus consolidating investment in real estate at a safe haven value. In fact, real estate accounts for between 80 and 98% of family wealth in Spain.
"Investing in times of crisis is an idea far from the reality of many households, but if this investment is made on a real estate that will turn out to be the family home, the place to build a life project and which will pay off in the face of in the future, the financial effort in this regard is worth it ", highlights Anna Puigdevall, treasurer of FIABCI Spain and general director of the Association of Real Estate Agents of Catalonia (AIC). And it is that more and more families are betting on buying a home thinking about their children and the long-term profitability that these real estate offer.
Housing is therefore presented as a safe, recoverable and revaluable investment, and a known asset in which to invest in times of uncertainty. This trend does not seem to change in the future, as the health crisis has focused on the importance of housing. "In the midst of the crisis, we experienced a slowdown in demand due to uncertainty, but the progressive return to the new normal has increased sales operations, whether of households that see stability in the home, or of families looking for new spaces housing that meet your expectations, "says Anna Puigdevall.
Young people and 'millennials': the new buyer profiles
The health crisis has also attracted new profiles of buyers who until now had opted for the rental segment. These are young people and millennials, who are also the ones who have dealt with this crisis the worst and who have the most problems with access to housing. "Taking into account that interest rates are on the ground, young people are starting to see how they could make their money profitable against the rent, so that the monthly payments are not a lost fund but rather to obtain a property in property ", indicates Puigdevall. And is that Spain is a country of owners, with a rate of 1, 38 homes owned per household.
With regard to investors, housing migrations together with the need for liquidity of the owners generate good opportunities that make this profile also see the home as a safe value to invest in, acquiring second-hand properties for its rehabilitation and future implementation for rent. "This profile is defined as buyers with liquidity who know how to detect market opportunities and who see in the purchase of real estate an operation with which to revalue a home and obtain profitability from it in the future," says Puigdevall.
Source: Via Célere
70% of the applicants for flats in the upper area of Barcelona look for the Galvany neighborhood as their first or second option, the area of Barcelona that has displaced Sarria and Pedralbes as the most desired by luxury home buyers in the city.
Very close to Galvany stand out Sarrià (63%), and at a considerable distance Bonanova (47%) and Tres Torres (25%).
Galvany also concentrates the largest number of homes for sale in the upper area: 40% of the 2,000 that are now offered in real estate and portals. Most of them come from inheritances or divorces, and that in the future it is possible that there will be more sales of entrepreneurs or managers affected by the crisis.
The pandemic has slowed down the rate of sales in the area, placing the average period to sell a home at six months. It has also adjusted prices. Rationality has been imposed on the market again: prices accelerated from the summer of 2019 and now they have returned to the level of then, around 5,000 euros / m2. The offer prices had reached around 7,000 euros / m2 in January-February, very high in contrast to the 8,500 euros / m2 for new construction in the area.
The pandemic has alienated the expectations of buyers (who seek steep discounts) and sellers, who are confident that the vaccine will normalize the economy in spring. But it is foreseeable that the transactions will stop in the coming months, until the situation is clarified. All in all, the negotiation margin has increased and the owners accept an average discount of 11% compared to 6% before the pandemic.
In the area, most buyers are young families who move from renting to buying, often with family help with entry. And investors, who are looking for a tight return, but without scares. What has changed the pandemic is the preference of buyers. Before they were looking for apartments with parking. Now what is essential is the terrace.
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