As one of the busiest years on record drifts into the rearview mirror, it’s time to get out the crystal ball and predict what to expect from the Costa del Sol property market in 2022. Based on this year’s performance, we’ve put together our forecasts for demand, sales, prices and interest rates over the next 12 months.
Another year of pent-up demand
As travel restrictions lifted this year, property sales on the Costa del Sol increased exponentially. Buyers from all over the world flocked to purchase homes and Malaga province ranked as the second-most popular place to buy in Spain after Alicante.
At The Property Agent, we fully expect more of the same during 2022 for the following reasons:
Rise in population
Malaga province added 24,500 new residents in 2021, a rise of 1.5%. Analysts believe the increase in Costa del Sol demographics (one of the highest in Spain) will continue into 2022 with the subsequent additional demand for homes.
Sought-after place to live
There are few better places to live than on the Costa del Sol in pandemic times. As many new residents have discovered over the last 18 months, life in the sunshine surrounded by beautiful scenery and with excellent facilities is highly desirable.
Work from home trends
Few workforces have made full returns to the office and as a result, employees the world over continue to work from home. And the Costa del Sol provides the ideal environment to do so.
Increased purchasing power
Many households have saved money during the pandemic and want to upgrade their homes. These savings and the massive injection of European funds into Spain (€19 billion in total) bring considerable purchasing power to the market.
More records for new-build figures
New construction has experienced an exceptional year and the absorption rate on the Costa del Sol has neared 90%, one of the highest in Spain. We believe this trend will remain throughout 2022 as buyers continue to prefer new-build properties for their larger floorplans and higher quality finishes.
Another busy year for sales
By the second half of 2021, Costa del Sol property sales had returned to pre-pandemic levels. Many of the transactions came as a result of renewed demand for real estate in the area.
We believe this trend will continue in 2022, driven by continued demand as outlined above. Furthermore, we anticipate that the bulk will centre on the western coastal resorts between Sotogrande and Marbella. Sales in this part of the Costa del Sol have been exceptionally brisk since summer 2021 and show no signs of slowing down.
Prices are still on the upward trend
Increased demand inevitably leads to price rises and the Costa del Sol property market has experienced steady rises over the last 12 months. With sustained demand, we expect prices to continue slowly but surely upwards during 2022 with a maximum increase of 10%.
More sales of high-end properties
The Costa del Sol, particularly in Sotogrande, Marbella and Benahavis, is home to some of Spain’s most expensive real estate. Sales of luxury homes (valued at over €1 million) and ultra-luxury homes (over €3 million) are the highest in Spain.
We predict this trend will continue over the next 12 months, particularly in the new-build sector. The Costa del Sol is currently building some of the finest properties in Europe, appealing directly to high-net-worth individuals who are also attracted to the area’s superior standard of living.
Interest rates are still low
The Euribor, the benchmark interest rate for mortgages in Spain, has remained in negative territory throughout 2021. Even if interest rates move up slightly this year, they are still in record low territory.
According to Bankinter, the 12-month Euribor will stand at -0.32% in December next year. However, the figure is only marginally higher than the current rate (-0.45%) meaning that mortgage payments will vary little in 2022. Therefore, homebuyers in Spain will continue to benefit from affordable home loans, adding further to demand.
At The Property Agent, we believe that 2022 will see the consolidation of the Costa del Sol property market. As a result, the sector will experience sustained activity with focal points at the higher end of the market and on new-build properties.
If you have plans to purchase on the Costa del Sol next year, do get in touch. We know we will be able to find the home that moves you.