16 May, 2020 @ 12:00
4 mins read

Coronavirus will rip a few roof tiles off Spain’s property market but it’s resilient enough to escape structural damage, writes Adam Neale

Colour Corrected Subway


A crisis always creates opportunities. For real-estate buyers, this can be good news. For sellers, it may mean lower expectations, both in terms of price and time to sell. 

As I write, we are still in lockdown in Spain, so we cannot show properties and the notaries are closed except for essential business, which means no house sales are being recorded. As such, it will be several months before we have any hard data with which to advise sellers. But one benefit of running a business throughout the last financial crisis is we have a pretty good idea of what to expect this time around. 

In the years immediately after the crisis, you will see the Spanish property market collapsed in 2007 and bottomed out in 2013 before beginning to recover in late 2013 / 2014. The national story was a long, steady decline before a long, steady recovery. It was one of contraction: in property sales, house prices, transactional values, construction and finance. 


This time around, and as long as treatments for Coronavirus contain or cure it within a reasonable timeframe, we expect a similar sharp drop in residential property sales in 2020 with an equally sharp recovery, once the immediate risk is mitigated or over. There is one large caveat: we can only expect this if tourists are allowed to visit Spain. If travel restrictions prevent this then, obviously, there will be fewer property transactions in areas such as the Costa del Sol and the recovery will be delayed.

STILL GOING: Businesses around Spain are doing what they can to stave off the worst of the crisis

One thing is certain, this coast will recover much quicker than the national market. While the national market took seven years to hit bottom, in contrast, Marbella and Estepona bottomed out within two years before starting to recover. We bucked the national trend, especially with regards to Marbella and Estepona, and there is no reason to think it won’t happen again.


It is highly likely that the recovery will be dominated by resale property transactions, which is good news for private sellers. New developments will suffer more than resale properties and will take longer to sell. This was a fact of the last crisis. After an initial spike in discounted new development sales, transactions dropped significantly against ever-increasing resale transactions.

We expect a similar story this time around, albeit on a lesser scale given there is substantially less development than in 2007. However, it will take some time for confidence to return to the new-build market and many developers will pause their plans for new projects.


There is no available data for regional prices but, on a national basis, if you compare the history of house prices in the last crisis against the number of residential sales for the same period, you will see that they reached the end of their downward trend at the end of 2013. The decline in residential sales drove the market prices downward until confidence was restored. 

The statistics show most buyers missed buying at the bottom of the market, with the majority of sales occurring before and after. If, as we believe, the local market sees a rapid fall before quickly recovering (subject to effective treatments of Coronavirus), then the best time to buy should be within the next six-to-18 months.


In the financial crisis, distressed sellers acted like rotten apples, infecting the whole barrel with the result that everyone was viewed and treated like a distressed seller, even though many were not. If, in the short term, the market becomes dominated by a few distressed sellers, some will be tempted to sit out the storm and take their property off the market until it recovers. We would advise sellers to wait a few months before doing that, to see how things develop. If you are in the position of needing to sell, act early and reduce your price sooner rather than later. If the market takes longer than expected to recover, as the statistics show, then the longer you hold on in a bear market, the harder you will be hit.

Last time around, the combination of inflated valuations and over-leveraged loans from Spanish and foreign banks clearly exacerbated the crisis. Since then, most overseas banks have changed their policies on lending to clients against assets in Spain, leaving the majority of mortgages in the hands of Spanish banks. As they have been directed by the Bank of Spain to exercise prudence with regard to valuations and loan-to-value ratios, we do not expect a wave of repossessed properties flooding the market, as happened in the financial crisis. However, for those who cannot afford to pay their mortgage, the best advice is talk to your bank as soon as possible, rather than sticking your head in the sand and hoping the situation will resolve itself. 


We will have to wait until mid-May for hard data about the health of the real-estate sector at the start of the year. Recent provisional data suggests a good start but it is still too soon to make judgements. 

Examining Google Analytics data from our own website for the period January 1 to April 31, 2020, we saw a 29% rise in traffic compared with the same period last year, which is encouraging. If we start our analysis from the beginning of the lockdown in Spain (March 14) until the end of April, and compare it with the same period in 2019, we still report an increase of 8% in overall traffic, which is steadily climbing.

In conclusion, although we have no recent official definitive data to rely on, and no market to speak of while lockdown persists, we can make some assumptions about what comes next, based on data from the previous financial crisis. We do not think the market will collapse this time around. If anything, we expect a few roof tiles to fall off and maybe some sustained damage, but nothing structural or systemic. There will be isolated cases of distressed sellers, offering opportunities for buyers in the right place at the right time. But the majority of sellers will adopt a wait-and-see position and, like the rest of the world, will be watching the news for positive signs from the scientific community and leadership from our elected politicians.

Adam Neale (Columnist)

Adam Neale is the owner of Terra Meridiana, a real estate agency based in Estepona on the Costa del Sol covering areas such as Marbella, Estepona, Sotogrande and Benahavís. Adam has more than a decade of experience in the sales and rental markets and, as Property Insider for the Olive Press, will be providing useful advice for buyers, sellers, tenants and all those interested in living in southern Spain. You can contact Adam by phone at +34 951 318480, pay a visit to his office at 77 Calle Caridad, 29680 Estepona (Málaga) or just visit his website at www.terrameridiana.com

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