With over 16,000 deaths and some very strict lockdown measures, Spain has been hit hard by COVID-19. With small businesses closing down temporarily and an end to social spending, the economy, like many others around the world, is taking a beating. It doesn’t take long for any economic downturn to have implications on the property market. In fact, they’re closely connected.
A big problem is that the Spanish property is very dependent on foreign purchases. The British are the most likely to buy a Spanish property and were actually driven to the market since Brexit as they look to seal their fate before an official departure from the EU.
This is, of course, not viable at the moment. Foreigners cannot travel to Spain just to view houses, and residents of Spain cannot simply visit estate agents in these lockdown times. The property market is therefore put on hold. And given that we live in an economic system that needs perpetual growth, being put on ‘hold’ is synonymous with ‘contracting’.
The property will no doubt start to fall in price, which will produce even less confidence in the economy as a whole. This may help future buyers, though, as they can likely pick up property cheaper than before. For those that own a home with a mortgage — their job now is to ride out this crash and stay solvent. The worst thing to do will be to sell in a time of negative equity.
Buying a home during the Coronavirus crisis
Buying a home won’t be most people’s priority right now, but we cannot completely give up on getting things done. One solution may be to look online and purchase a home remotely. If you’re confident that you want a property, or if you viewed it before the lockdowns, then you could certainly get things in motion.
Solicitors and estate agents may have closed their offices, but many will be working from home remotely.
Conversations can certainly begin now, and it’s even possible that contracts and payments can be made online too.
Property prices falling is always a big opportunity during a crash. These are the times where you may find yourself picking up an undervalued property that rises back to its true price within a few years.
One important thing when buying a home remotely is finding a trustworthy property manager or solicitor. Just be aware, if you need a large mortgage, you may struggle to get one during this crisis.
The future of Spanish property
The future of Spanish property is highly dependent on the pandemic. We know a few things that are for certain: Brick and mortar will still always be valuable, and that the pandemic does have an end, we just don’t know when exactly.
It’s estimated by economic experts that the crisis could be a bad one, but it shouldn’t last too much longer than the pandemic itself. It’s not similar to the 2008 crash, which was tied to overvalued assets in the economy. It’s simply that we have put consumerism and small businesses on hold. Once lockdown measures are relieved, property markets will start to be active again.