Before we dive into the statistics of the real estate sector on the Costa del Sol, It is worth taking stock of the macroeconomic outlook in Spain to provide a context for the market.
Spanish inflation
After most of 2022 with rampant inflation, 2023 has had a more moderate start in Spain. March registered a figure of 3.3%, the lowest monthly rate since August 2021. Core inflation, however, continues to rise and stood at 7.5%, driven mainly by rising food costs.
Interest rates
Unlike inflation, Euribor shows no immediate signs of falling and is currently moving closer and closer to 4%. Most analysts believe it will rise to 4.3% at some point in the near future, although many predict that this will be the highest this year.
Much will depend on economic developments in the Eurozone, future developments in the stalled Ukraine war and unknowns such as further banking disruptions on a par with Credit Suisse.
Certainly, the number of mortgages taken out in Spain has fallen over the last year, indicating a slowdown in the market. However, according to the Málaga Property Observatory, OMAU, 45% of buyers on the Costa del Sol buy without a loan, suggesting that the market is less affected by rising interest rates.
Property sales on the Costa del Sol
According to these figures from the Spanish Statistics Institute (INE), there were 5,767 transactions across the province during January and February, with 3,042 sales recorded in February alone. The total represents a decrease of 14.4% compared to the same period in 2022.
However, we feel it is worth noting that more than 108 properties changed hands every day on the Costa del Sol during February.
The appetite for property on the Costa del Sol appears to remain strong and transactions have accelerated since the fourth quarter of last year.
Property prices on the Costa del Sol
Spain does not publish official sales price statistics; most of those available are based on valuations or sales prices on online portals. However, the various sources give an overview of the situation. They also show that the general trend of prices on the Costa del Sol continues to rise.
Idealista (based on sales price)
The real estate portal calculated the average price per square metre at €2,849 in March, the equivalent of an annual increase of 13.9%. The figure is among the highest in Spain, indicating that owners are taking advantage of the still strong demand.
Prices on the Costa del Sol in April 2023
Several locations on the Costa del Sol exceeded the average price rise for the area at the beginning of this year. According to Idealista, many recorded double-digit rises, for example:
BenahavÃs -Prices rose by 7.5 1Q2013Q to €3,981 per square metre, slightly below the increase in the fourth quarter of 2022.
Estepona - values continued to increase by 19.3% to €2,993 per square metre.
Manilva - prices shot up by 18.8% to €2,149 per square metre.
Marbella - values increased by 18.6% to €4,138 per square metre.
Sotogrande - House prices continued their upward trend and rose by 7.8% to €2,723 per square metre.
Although the Costa del Sol's real estate sector is still estimated to have 22.6% of growth before it regains its highest price on record (reached in 2007), this figure is considerably reduced for some locations. Marbella is a good example, and prices are estimated to be just over 10% away from their peak.
Despite predictions of lower prices, values on the Costa del Sol show no real signs of falling, particularly in places such as Marbella and Malaga city. The phenomenon is attributed to the rush to buy property before interest rates rise further.
International market on the Costa del Sol
International buyers have traditionally played an important role in the Costa del Sol property sector, and the first quarter appears to have been no exception. OMAU reports that foreigners accounted for 34% of the market, an unusually high share that underlines the interest in Costa del Sol real estate from abroad.
Property on the Costa del Sol remains as popular as ever with international buyers.
Rental market on the Costa del Sol
The lack of long-term rental properties on the Costa del Sol was the prime example in the first quarter of this year. According to Idealista, while supply in Spain fell by 5% in Q1 to its lowest level since 2016, Costa del Sol real estate plummeted by 15%, one of the biggest falls in the country. In Málaga city the shortfall was considerably worse, with 27% less homes available in the first three months of the year compared to the same period in 2022.
Meanwhile, rental rates continue to spiral upwards. Rents on the Costa del Sol cost 14.7% more at the end of March than a year earlier and average €12.6 per square metre, one of the highest in Spain. The quarterly increase was almost 3%.
Supply shows no signs of growth, so tenants can expect more expensive rates and buy-to-let landlords can expect better returns.
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