Madrid property update.
Updated: May 4, 2020
In Madrid, as we are slowly coming out of coronavirus lockdown, as builders get back to work in apartment buildings and estate agents and sellers start showing properties again, the only certainty is that buying and selling properties will be quite different to how it was only a few weeks ago back in early March.
Showing properties will have to be done carefully: meeting times meticulously made and kept, no showings running into one another, kits of face masks and hand santitiser made available for both real estate professionals and clients alike, and - perhaps what most people want to know - there will be some interesting movement in prices.
Back in January analysts were already predicting a slow down in yesrly property price increases (which had been rising steadily since 2014) forecasting a drop to 3-4%, down from 4.5%in 2019 and 5.4% in 2018.
How dated that sounds now amid the new corona-affected world of Q 2 of the year.
Just how much and how fast we see any price corrections remains to be seen. Predictions of drops vary, with some suggesting corrections of around 6% which can be absorbed by the market, (BankInter) others slightly more.
In Spain the property crash of the last decade is not far from anyone´s minds, but while that took years to recover the general consensus here is that - assuming we can get back to work and things stabilise by the summer then prices shouldn´t drop drastically and will start to rise again in 2021.
Of course, prime properties in central Madrid and Barcelona, and well finished product in the better streets should be better placed to withstand the price drops, and developers of new builds say they are still taking reservations without discounting.
Three weeks ago some sellers were already reducing on the portals, while thousands of other sellers choose instead to tame their homes off the market - I was one of them - no sense advertising anything for sale without being able to show it or - in the (unlikely but possible) event of a sale ‘sight unseen’ notaries will only do urgent work, so you wouldn’t be able to sign off on it quite yet.
According to the press here, people are also planning a mass exodus from the cities especially Madrid and Barcelona, to the countryside....or thinking about it at least. Apparently searches into homes in Segovia an hour north of Madrid have gone up 240%.
I’m not sure this actually translates into real sales as I spend a great deal of time ‘planning my escape to a country house’ on idealista but never actually act on it......it might seem attractive to live in a larger house with a bigger garden, and for some looking for a lifestyle change post-corona it will be the solution, but in reality city centres will always be prime real estate.
Estate agents are now taking bookings to show flats from tomorrow May 4th, while owners must wait a little longer to show their own properties directly to clients. Coming out of lockdown and looking to the future, albeit tentatively, people are starting to look again at buying property, even if it is still mostly virtual for most people....but I hope that within a couple of weeks things start to look more ‘normal’ or at least the ‘new normal’.
What is certain is that in times of economic trouble investors look to invest in bricks and mortar and I expect that the post-corona world will be no different.