Leading international advisory firm Deloitte has published this year’s Property Index report, summarising the situation in the European property market and indicating the directions of development in this sector. How does Spain and investments in houses and flats on the Iberian Peninsula fare in the comparison?
Mortgage loans a yardstick for the market
Interesting data concerns mortgages. Currently, average household debt remains relatively low in Hungary, Romania, Greece, Slovenia and Croatia. Analysts estimate that these countries record around 30% of outstanding housing loans relative to household disposable income.
In contrast, countries such as the Czech Republic, Austria or Slovakia maintain private household debt levels in the range of 40% to 60%. On the other side of the table are Denmark, Norway or the Netherlands, which have the highest levels of household debt. Deloitte experts also looked at the situation in the mortgage market. They noted that the highest lending rates are still recorded in Poland (8.1%), followed by Romania (7.7%), Hungary (7.4%) and Serbia (6.8%). Average mortgage rates above 4.5% were also recorded in the Czech Republic (5.9%), Denmark (5.2%), Bosnia and Herzegovina (4.9%), Norway (4.8%), Italy and the UK (both 4.7%).
In contrast, the lowest average mortgage rates were recorded in Bulgaria (2.5%), Spain (3.1%), Belgium and Croatia (3.3%), France, Slovenia and Portugal (3.6%), Slovakia (3.8%) and Austria (3.9%). Additionally, countries such as France (740,000), Spain (381,045), the Netherlands (332,482) and Italy (303,689) have the highest number of mortgages granted. Experts emphasise that this situation is a confirmation that we are dealing with a very active housing market, where high transaction volumes and significant customer lending activity are observed.
Spain a promising market
The low level of lending rates in Spain translates into a growing interest from foreigners to buy property in the country. It is also worth looking at the availability of flats and houses on the local market. The Deloitte report states that, in addition to the number of housing starts and completions, the total number of dwellings is usually considered a key indicator of both the standard of living and economic development of countries in Europe.
As the analysts point out, it is Bulgaria that currently has the largest housing stock per capital city, with 668 dwellings per 1,000 inhabitants, among the countries surveyed. The next places are occupied by: Spain with 559 dwellings and France with 553 dwellings per 1 000 inhabitants. The interesting data concerns the absolute values. It is Germany that has the largest housing stock, with 43.6 million dwellings. France is second with 37.8 million dwellings, followed by Spain with 26.8 million dwellings. It is clear that Spain is at the forefront of the countries in terms of housing and house availability.
Deloitte’s data also focuses on the issue of property prices. In the €2,000/m2 to €3,000/m2 range for new flats are the Mediterranean countries Italy (€2,118/m2) and Spain (€2,745/m2). At the same time, while Hungary has seen an increase of 13.3% and Poland +12.2%, against this backdrop the Spanish market is far more stable and there is no concern of significant increases in flat or house prices.
Why invest in Spain?
In the Deloitte report, one can also come across a detailed analysis of the Spanish property market. According to the experts, it presents a positive outlook, driven by a solid macroeconomic environment. One of the important factors will certainly be further economic growth, which will be around 1.8 per cent between 2023 and 2026. According to experts, there will also be an improvement in the labour market, with the unemployment rate reaching its lowest level since the financial crisis of the early 2000s.
Demographic projections are also a positive sign for the Spanish economy, with an estimated population increase of 5.4 million between 2020 and 2050 and an annual increase of 182,000 households between 2022 and 2037. This will drive demand and thus positively stimulate the economy. Interestingly, the percentage of homeownership in Spain remains high at 76%, compared to the EU average of 70%. However, experts note that long-term renting is growing in popularity on the Iberian Peninsula.
