TO some, it may seem like we’ve been here before – a serious economic crisis that halts growth and progress and little more than 10 years since the last one.
However, this is where the comparisons end, as today’s situation is caused by an enforced lack of economic activity imposed as authorities fight the spread of the COVID-19 virus, whereas the crisis that began in 2008-2009 was entirely financial and economic in nature. So, what does this mean for the housing market in Marbella and the Costa del Sol?
Well, to start with, as horrible as COVID-19 is and as much as it impacts on society and the economy, the fact that it’s root cause is not economic should ensure that any slump in the market is purely the result of virus-related regulations and not inherent to the market itself.
In other words, there is nothing wrong with demand itself, as we saw when a flood of enquiries followed the lifting of the lockdown in May of this year.
People are keen to get back to working, consuming and investing, and perhaps more than ever will be drawn to the space, climate, views, greenery and quality of life offered by places such as the Costa del Sol.
We therefore expect that the property market will speedily return to strength once the restrictions are lifted, and indeed, the pent-up demand should in fact create something of an initial boom sensation.
Property prices in areas such as the Costa del Sol have been remarkably resistant to change for much the same reasons, though it is expected that they will have dropped a bit by the time the tide starts to turn in the spring of next year. Expectations are that they will once again begin to rise during the rest of 2021, along with a gradual return to full health of the property market in the Marbella area.
There are some markets that have become overheated in the run-up to the present situation, but very few major ones where a serious bubble exists of the kind that blew up in 2008.
The markets that are perhaps overvalued and likely to feel the pinch of the COVID-19 situation most include Hong Kong, London, Sydney and New York, where a combination of years of growth and price rises, as well as bleaker local forecasts, could spell a tougher road to recovery.
Political factors in Hong Kong (the clampdown by China’s government) and London (Brexit) will temper growth there for some time to come, while property values in the likes of New York, Sydney, Toronto and Amsterdam need to come down a little to reanimate the market.
In other major centres, such as Munich, Frankfurt and Paris, the transfer of jobs from London’s financial sector will add to property prices that have in any case not reached their limits yet.
On a national level, major Spanish cities such as Madrid and Barcelona will need some time to recover from the impact of COVID and high prices, but an actual bubble as such does not apply, while coastal lifestyle areas such as Mallorca, Ibiza and especially the Costa del Sol continue to offer good value and decent prospects for capital growth and investment.