After a year marked by the COVID-19 pandemic, the real estate sector is currently in a situation of optimism and growth. This was reflected in CBRE’s EMEA Investor Survey 2021, which stated that 55% of real estate investors expected to increase their purchases in 2021. Are you interested in investing in a property? Do you want to know if it is a good time to do so? Read on!
In order for you to better understand the new trends in the industry, we will start with some of the basic fundamentals of the real estate market.
Price of the properties
Housing prices can be affected by several factors, one of the most common being supply and demand.
Another factor is the mortgage rate, which affects demand. When rates are at low levels, interest in buying a home increases.
Mortgage interest rates
Interest rates play a very important role in the real estate sector. They have a direct impact on demand, housing prices and affordability.
Affordability of housing
When we talk about affordability, we mean how affordable housing can be. Affordability is not only the result of housing prices. There are other factors such as inflation, income and interest rates that influence housing affordability.
Housing market cycles and downturns
This factor is also important because it directly affects home prices. When inventory or supply is low and demand is high, housing prices rise, bidding wars break out and sellers have a great advantage in negotiations.
If, on the other hand, there is more supply of housing than demand for it, it is the buyers who have the upper hand in negotiations.
As with the economy, real estate is cyclical. It has booms and busts, as we saw in the real estate crisis of 2010. However, we are currently in a boom period and experts do not believe that we are approaching another crisis.
Now that we have discussed the basic fundamentals of the real estate sector, here are the trends you need to know about when investing in a home.
Trends in the real estate sector
- Rental offers
One of the forecasts that were announced as a result of COVID-19 is that there would be an increase in the supply of commercial premises, mostly in the city centers and, in addition, with a decrease in prices. Those businesses that depended on the presence of customers during the pandemic months have been forced to close, thus producing an increase in the supply of rented premises.
With the pandemic, those who used to rent their homes to tourists have also been affected. This has led to a shift in business towards traditional rentals. However, this situation is only temporary, since, gradually, people are starting to travel again and, therefore, we are seeing more and more housing supply for holiday rentals.
2. Changes in housing characteristics
Confinement has changed the way many people view the home. Spending so much time indoors, people longed for more space and, above all, outdoor space (garden, balcony…).
The advent of teleworking has caused those who have had to work from home to value much more the space of their homes. Since they needed a differentiation between the work space and the rest space.
One of the most marked trends in 2021 is that people give less importance to the number of bedrooms and more importance to those properties that have attics, basement, terrace or garden.
There is also a growing demand for properties that are close to green spaces and further away from urban areas.
On the other hand, one of the aspects that buyers are valuing the most is the energy efficiency of the property. This is due both to the change in social awareness regarding the environment and to the fact that the price of electricity is increasing and an energy-efficient home reduces the price of the electricity bill.
3. Green certification and sustainability
As we said in the previous paragraph, more and more people are looking at the sustainability of housing. In fact, it seems that very soon we will have less polluting housing. This is due to the implementation of new laws that are intended to be imposed in Europe.
The aim of these new policies on the sustainability of the materials used in construction is to reduce the pollution generated by housing blocks and make them more energy efficient.
The result of buildings that are sustainable is clear: increased real estate value in the market.
However, this type of project is moving forward with leaden feet and, during this year, we will not see significant changes.
4. Price of the house
One thing that experts expected for 2021 was that, due to the COVID-19 crisis, the number of home sales would increase and prices would fall. This forecast is not coming true because, in the last year, we have seen how the real estate market is becoming more and more dynamic and home sales are increasing.
In fact, the gradual rebound of the economy and the speed of vaccination has changed the course of the real estate market, as prices in the sector are expected to rise.
Experts foresee that real estate will become more expensive in the coming months, mainly in large cities and their surroundings and, more specifically, those homes with outdoor space, which are the most in demand.
After all this information comes the big question: Is it recommendable to invest in housing in Spain?
At a time of uncertainty like the one we are living in, there is something that all experts agree on, and that is that the real estate market will continue to be attractive, since it is a sector that, in general, always revalues over time and offers very interesting returns for investors.
In addition, we must take into account that if we invest in the houses that are most in demand (houses with larger spaces, terraces, etc.), we will obtain higher profitability.
In short, it is always a good decision to invest in real estate because it is a profitable asset in the medium and long term.
If you are thinking of making a real estate investment, at Selectiva Real State we help you find the perfect home.