What can we expect from the real estate market in 2019?

Analysing comments from different experts on Spanish real estate, 2019 appears as the year of recuperation with price increases of between 4% and 6%.

The end of this year has come and gone and it is time to address the forecasts and tasks that the market should undertake in the next 12 months. The majority of property developers and experts consulted predict that there will be a consistency in the market, but also a moderation of price stabilisation.

2019. This is the year

2018 was the best year for the housing market since the crisis broke out and we expect that trend to continue in 2019, although in more moderate terms.

There are figures from BBVA Research, which illustrate that it is indeed a good moment.

The start of the recovery of the real estate sector was something different and, on this occasion, that recovery has been supported by a buoyant economy, when the norm was the reverse: that the construction sector initiated the first advances in the economy after a period of contraction of industry.

During the last year the real estate sector grew in all areas and demand rose by around 10% over the previous year, which has led to the sale of 590,000 homes.

But, in addition to these good figures for the year that has concluded and the good prospects for 2019, other real estate agents understand that 2019 will be the year of the maturity of a fundamental sector for the national economy.

Spain has reached a point of maturity in which we do not expect large increases in activity, but it does consolidate or slightly improve the figures in the new construction promotion business.

This new cycle is marked by a protagonist wh0, in earlier times, was not so present: the client. He will continue to be the axis alongside innovation and sustainability, on which different promoters are already working on, to cover even more the needs of future owners. There has been increasingly new offer of green, modern, smart and fully adapted properties to the new demands of the client.

What about prices?

One of the main indicators to measure the health of the real estate sector is the price of houses. By 2019, according to the experts consulted, this parameter will remain upward but in a more moderate way.

Regarding second-hand apartments, according to the Real Estate Index of Fotocasa, 2018 closed with an average annual price increase of 7.8%, the highest level since 2006.

"The behaviour of prices remains very uneven and in 2018 the differences between regions have been further marked, with Madrid, Cataluña and the islands leading the increases with year-on-year rises ranging between 10% in Cataluña and 19.5% in Madrid. These increases contrast with the more moderate behaviour of the rest of the country and with the red numbers still registered in some regions.

The Director of Studies of Fotocasa highlights, in addition, that ‘although these percentage rises are reminiscent of the years of the boom, the average price of second-hand housing is still 36.7% below the maximum of those years’. This together with the checks on financing and the stabilisation of the market, distances the possibility of a ‘real estate bubble’.

Looking ahead to 2019, Fotocasa argues that this sector will continue to grow at a good pace and prices will continue their upward trend although they will stabilise.

All the forecasts indicate increases between 4% and 6%

Carlos Zamora, residential director of Knight Frank, points out that ‘prices are around 1,800 euros per square meter in new construction and about 1,600 euros in second hand, and by 2019 we expect the growth experienced in some cities such as Madrid and Barcelona to soften, while the recovery in other markets is consolidated’.

Tinsa predicts that there will be a ‘gradual stabilisation in Madrid, Barcelona and other cities with notable recent increases, and continuity of increase in their urban areas’.

“In the rest of the regions there will be possible moderate increases," explains Rafael Gil, director of the Tinsa Studies Service.

From Aedas Homes, its CEO, David Martinez, says: "We expect and want healthy increases around 3%, 4% and 5% nationally."

Obviously, and due to the high heterogeneity of the market, there will be locations where they increase at a faster rate and others in which the increases will be slower.