Mark Stücklin
Foreign demand played a key role in driving sales and rental prices to record highs last year in the Catalan capital, whilst supplies were restricted by regulations.
Strong foreign demand for both rental and purchase lifted the Barcelona housing market to record highs last year whilst local and regional government policies caused the supply of new homes for sale and long-term rentals to dwindle, causing price pressures in both markets, and feeding local resentment.
According to the latest data from Barcelona City Hall (Ajuntament) there were more than 16,000 home sales in Barcelona last year, up 16% on 2021, and the highest level on record.
Resales were up 39% and new home sales up 18%, but if you look at the quarterly figures (next chart) you see new home sales declining in the second half of the year whilst resales continued up, perhaps due to the growing scarcity of new homes for sale.
Barcelona house prices in 2022
Average house prices increase by 6% in terms of €/sqm, the first upward increase in the trend since 2017. Politics and the pandemic have been dragging the trend down since then.
Foreign demand for property in Barcelona
Foreign buyers of homes in Barcelona increased to 2,871 last year, up 46% on the previous year, and the highest figure on record. In contrast, local demand increased 11%, lifting the market share of foreign buyers in Barcelona to a record-high of 18% in 2022.
High-end foreign dominance
The high-end of the property market in Barcelona is even more dominated by foreign buyers, with some luxury new developments selling more than 50% to foreign investors, according to industry insiders. Last year saw a price-shattering €45m paid for the penthouse of the Mandarin Oriental Residences in Barcelona by an investor from the Far East. “Foreign demand for Barcelona is strong across the board, but particularly at the high-end,” explains David Rolt, Director of Francesc Macià 10 Barcelona, the first super-prime development in Spain. “As a lifestyle destination Barcelona is hard to beat, furthermore the investment case for real estate is compelling in this period of high-inflation, low interest-rates, and bank failures.”
Barcelona new-homes pipeline
The supply of new homes in Barcelona is shrinking fast. The number of major-works building licences granted by City Hall last year was just 558, down 34% in a year, and the lowest level on record. New home building in Barcelona has collapsed in response to local government policy.
Barcelona rental market
Rental prices in Barcelona rose to an all-time high of 14.50€/sqm in 2022, up 10% in a year, whilst the number of rental contracts fell 16% to 47,900.
Rising prices and falling contracts suggest a supply shortage. Industry insiders confirm this. “In our 75 year history, we have never had so little available,” says Guifré Homedes, head of estate agents Amat, referring to rental properties. In their 2022 annual market report Amat say policies championed by City Hall and the regional government have led to an exodus of rental investors from the sector, constricting the supply.
At the same time rental demand in Barcelona has increased, in part due to a growing number of foreigners moving to Barcelona. “Before Covid they were 15% of our clients, now they are between 40% and 45%,” say Amat, referring to foreigners looking to rent in Barcelona. Amat forecast “market paralysis” in 2023, as sitting tenants stay put due to the lack of alternatives, and new entrants find thin pickings and high prices. This has unwelcome “social consequences” say Amat.
2023
What to expect from 2023? With supply shortages in both rental and purchase markets, strong foreign demand, and interest-rate increases in doubt due to bank worries, it’s reasonable to expect house prices in Barcelona to stay firm, and rents to continue increasing. Politicians will call for rent controls, which will only make the situation worse if history is any guide.
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Richard La Ruina says:
We are trying to sell 2 apartments in Barcelona (Digonal Mar sea-view apt and Poblenou loft) and it is still extremely slow. Rather than lots of viewings and offers, it seems to depend on getting that one interested buyer. So the market feels very illiquid. I asked what price we’d need to drop to to sell instantly and they said it’d need to be about 20% below market price (which would be around the price it was in 2015). Now we feel like it’s 50/50 about whether we’d be able to sell at all before the end of Summer.
Mark Stücklin says:
That’s interesting to know. I look at the overall figures and get some input from agents but I miss this kind of viewpoint. But I’m assured by people in the business that the Poblenou is still hot. Asking price has a lot to do with it though.