Only the rich continue to buy homes
The ‘prime’ areas trigger demand and prices despite the brake on the sector
Buyers with bigger budgets and ‘premium’ digital nomads are growing. Prices reach 14,000 euros per square meter and Madrid, Barcelona, Malaga or Palma are the favorite destinations.
Luxury remains oblivious to the slowdown that the general real estate sector has been registering for months. In 2022, transactions in this segment skyrocketed by 55% in Spain and activity during the first half of 2023 continues to rise, compared to the 6.7% decrease registered by home sales in May, for the sixth consecutive month. based on data from the Association of Registrars presented yesterday. The great fortunes continue buying houses while the rest of the mortals withdraw from the market due to the impact that inflation and the rise in interest rates are having on their household income and on access to financing and mortgages.
We do not see a slowdown in sales in the prime market. It must be borne in mind that the moderation in operations is caused by greater economic instability and a higher cost of accessing the mortgage market. These two factors do not affect prime homebuyers or do affect them to a much lesser extent.
In Spain there are more than 7,000 properties of more than 3 million euros for sale, which represents 5% of the total real estate market. And there are more and more buyers and investors, with higher tickets, interested in getting one of them. “In recent months we have noticed an increase in the average price of the type of client, that is, they come with more available budget to acquire a property because people with greater wealth are being less affected by the general economic uncertainty and its consequences. “.
On the contrary, there is a profile below one million euros that has been showing a more contemplative attitude in recent months, waiting for the economic uncertainty to be resolved. This profile is more affected by the rise in interest rates and the increase in financing costs and going beyond the psychological barrier of one million euros does influence them to end up postponing their purchase decision.
Despite this, the demand is such that market forecasts do not point to a relaxation of prices. Rather the other way around. “In the case of new construction, the price per square meter is at levels between 12,000 and 14,000 euros, while the second hand is placed at 8,000 euros (to which the cost of reform should be added).
The price, in any case, does not seem to be a drawback for this type of buyer. The profile varies depending on the area, but all coincide in looking for spacious and bright homes with a good location in central areas of the cities. The national buyer continues to carry out more than half of the purchases in the luxury market, but the foreigner is gaining ground.
The Andalusian city of Marbella is one of the main destinations for great fortunes and also for digital nomads, whose arrival in Spain is also serving to spur this high-end market. In the capital of the Costa del Sol, a 6% increase in potential clients has been detected compared to the previous year and the annual increase in prices exceeds 12% in prime areas.
But the sale is not the only market that is booming when it comes to luxury real estate. The demand for premium rental housing has also skyrocketed in recent times, fueled by a demand from people who want to live in urban centers but without becoming homeowners. “Many are foreigners who choose cities like Madrid or Barcelona as a base for their activity in Europe and others are higher-income digital nomads, who are also growing a lot in recent times. Prices in this case vary depending on the size of the real estate, but they have risen between 5% and 15% due to the shortage of available products. Welcome to Puente Romano Marbella.
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