Vendor expectations are positive again in the Catalan capital, perhaps due to the return of foreign buyers.
It’s been a tough few years for vendors in Barcelona, as their expectations were driven down first by political instability, and then Covid-19 pushing buyers out of the city in search of space in the suburbs.
Since mid-2019, vendors have been forced to drop their asking prices in search of a buyer creating a downward spiral in asking prices that encourage buyers to wait for further declines – a process that has gone on for almost three years in favour of buyers.
As you can see from the chart above, the downward trend in asking prices actually started in October 2017, the same month a separatist Catalan regional government held a disputed referendum to break away from Spain. That generated political instability in Catalonia, leading to riots in Barcelona, all of which turned off international investors.
Foreign buyers return to Barcelona
The recovery in asking prices might have something to do with the return of foreign buyers to Barcelona. As you can see from the chart below, foreign demand plunged by more than 30% in the aftermath of the separatist referendum in 2017, before staging a brief recovery in 2019 as many foreign investors came to the conclusion the independence drive was leading nowhere.
The reputational damage was done, however, and foreign demand never returned to the levels before the referendum turned the independence drive into a full blown constitutional crisis. Many potential buyers from abroad were permanently turned off Barcelona by the instability and scenes of violence, so the recovery was feeble at best.
Covid-19 was another hammer blow for the market, as lock-down and travel restrictions kept foreign buyers away, and local buyers switched to the suburbs in search of more space. It’s easy to see why asking prices have been falling in the Catalan capital since June 2019, especially when you consider that Barcelona is also the squatter capital of the world.
Now foreign buyers are back in numbers not seen since Q3 2017, when 600 Barcelona home sales involved a foreign buyers, compared to 598 in Q2 of this year, the fourth highest quarter on record, all according to figures from Barcelona City Hall (Ajuntament).
Who knows how long this boom in foreign demand for property for sale in Barcelona will last, but it seems to be helping to make life easier for vendors in the Catalan capital, who felt confident enough to raise their asking prices by a timid 1% in June compared to the same month last year, though with inflation at close to 10%, real asking prices actually fell by around 9% at the same time.