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Expert advice on the Barcelona property market
Barcelona Property Market 2022
Since the 2008 meltdown a notable feature of the Spanish Property Market in the recovery phase was how disconnected the overseas and domestic sectors of the market were. In general, overseas buyers were not really affected by what was going on in the Spanish economy, however bad that was. In fact, the overseas part of the property market got going in recovery mode from 2012 while the domestic side was still on the way down until 2015. We still see that aspect of the overall market today in most of the locations where the majority of overseas buyers go.
However, that does not apply in Barcelona and other major Spanish cities. The overseas element is relatively small and it is the domestic sector that dominates. Issues such as rising unemployment and reduced GDP have an impact on the property market in a way that doesn’t occur in locations where the foreign sector may be as much as 50% of the overall market.
However, overall, in normal times, foreign buyers account for about 18% of the total property market in Cataluña region. In the Covid-19 affected market in 2021 the 1st half year figure only fell 2%, registering a total of 7,830 foreign buyers in the region. However, by far the most important part of the property market in Cataluña is the province of Barcelona. In the same period in 2021, 67% of all property transactions happened in Barcelona province while Barcelona city accounted for 24.7% of all purchases in the province. Foreign market share in the province was 11.8%, well below the national average foreign market share of 15.4%. Although there are no reliable statistics just for the city, our experience suggests the overseas element is approximately 10%.
Review of 2021
In spite of all the pessimism and dire predictions at the start of the year, the property market at both the national and regional levels proved remarkably resilient. By the end of Q3 2021, total transactions had equalled the number for the whole of 2020. When we have the results for Q4 it seems likely the national total will exceed 520,000, less than 10% below 2019. This trend was also seen at the regional level and we predict the 2021 total for Barcelona province will be around 61,000 transactions and, in fact, this would put the 2021 total about 2.5% higher than 2019.
At that time it was the second consecutive year we saw property prices fall in Barcelona. In 2019 prices per square metre declined -2.7%. Consequently, all the signs were that with the arrival of the pandemic we were going to enter a period of falls for the foreseeable future. However, it seems that Barcelona property prices are actually holding up better than expected.
Evolution of Prices
At the end of 2021 the average price in respect of resale property in Barcelona city was €3,952 per square metre, the same as it was at the end of 2004. This represents a -25.3% fall from the high point in June 2007, at which time it was €5,291 per m2.
At the beginning of the pandemic price were broadly stable but from May 2020 the collapse in demand turned the tendency strongly downwards. However, by the end of Q3 2021 price falls moderated and, in general, prices seem to be holding up better than expected, down only a further -1.4% over 2021.
Average prices always hide important variations. In terms of districts in Barcelona 5 zones are well above the average price per M2 of €3,952. At the end of 2021 the leader is Sarria Sant Gervasi (5,241 pm2, followed by Les Sorts (4,019, Eixample (4,500), Gracia (4,217) and Ciutat Vella ( 4,019). In contrast, 5 zones are below the average: Santa Montjuïc (3,358), San Martí (3,531, Sant Andrew (3,060), Horta Gulnardó (3,026) and Nous Barris (2.387). Of these, only Sarria Sant Gervasi registered a rise in prices per M2 during 2021, up 1.8%.
In our view, the fundamentals that govern the strength of demand will improve over the course of 2022 with recovery to pre-pandemic 2019 levels during the course of the year. We would attribute this recovery to two principal motives.
Firstly, a surge in demand caused by the virtual paralysis of transactions between March 2020 and June 2021, the period most affected by lockdowns and travel restrictions. A lot of people are playing catch-up but we would expect a more stable period to be established once this accumulated demand is out of the system.Secondly, as already mentioned, the Barcelona market is principally driven by domestic demand with only about 10% of the market due to demand from overseas buyers. Therefore, mortgage availability and affordability are vital. This is currently the case and we see no reason for that to change in 2022. Euribor continues in negative territory and long-term, fixed rate loans are now about 66% of the mortgage market.
In the final analysis, the evolution of the 2022 Barcelona property market depends on the impact of the Omicron variant, the possible emergence of as yet unknown variants and international travel getting back to pre-pandemic levels. However, we firmly believe that the latest statistics for 2021, although not complete, clearly show a market in much better health than many predicted just one year ago.
Please get in touch by calling or filling in the form below. We are experts in all aspects of the property market in Barcelona and will guide you to the best properties in the best locations. Our local knowledge will ensure you buy at the best price.
For our report on the Spanish Property Market in general click here.
This report will be updated as we head into 2023 but in the meantime I have covered the most recent statistics for the overseas market in 2022 so far in this blog.
Click here for more about Barcelona city as a destination for your property purchase.
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