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2023 Marbella Property Market Remains Strong Despite Rising Inflation

Since inflation began to rise in Spain, many news headlines and expert opinions warned that the property demand in Marbella together with the rest of Spain would slow down and that the price would correct its upward trajectory. However, the pressure of demand on supply grew in 2022 and stood at levels higher than those reached in the two previous years. Without going any further, in December 2022 it increased 0.11 points compared to December 2021. And the property price in Marbella and Spain has continued to rise: in January it grew 5.4% more than a year ago.

What is happening then? Who buys a home in Marbella and the rest of Spain in the midst of rising interest rates and, therefore, the Euribor? According to the latest survey to more than 4,000 people, 70% of those who want to buy a home, already own at least one home. This means that many people buy property for replacement, that is, they already have a house, but they are looking for a different one. Specifically, of the people surveyed, 19% look for another with improved amenities; 17.4% buy for investment; 14.7% are looking for a second residence; 14.3% because the pandemic, want a bigger property, and 6.2%, a smaller one.

Property experts maintain that with property investment, you can still obtain returns that are above the price of money and this may be motivating the market to remain active. "In addition, foreign investment is helping to stabilize prices, especially buyers to relocate and those looking for the Spanish Golden Visa, from Latin America and countries surrounding conflicted areas and those with the political uncertainty that certain countries are going through - who bet on Spain for reasons as obvious as cultural, linguistic and even gastronomic identity" he adds.

In addition, property buyers are solvent. Almost 50% of those surveyed do not need a mortgage or if they do, it is for less than 50% of the appraised value of the property. That is, there is not so much dependence on a financial institution. 32.2% need between 50% and 80% of a mortgage, while 13.9% need a loan of more than 80%. Only 5.6% need a 100% mortgage.

An economist expert point out that people who depend on a mortgage will be affected by the increase in the cost of loans. However, this expert emphasizes that the average amount of mortgages is currently around 179,000 euros, which contrasts with the 258,000 euros of 2007, "without taking into account the 29.25% inflation that has occurred in these fifteen years, which would make the average amount in real terms of a mortgage today is 54% less than what it was before the housing bubble burst.

Finally, it indicates that there has been a particular effect in relation to the rise in interest rates (currently at 3%), as rising inflation and the ECB's policy change have meant that many who were thinking of buying a housing have accelerated their plans to get it cheaper before the rise in interest rates materialized. Probably, many of these transactions have been contracted at a fixed or mixed rate, since to do it at a variable rate the moment does not matter. “This excess of mortgages should be noticed in the coming months with a decrease in those contracted in 2023, and also it will be a bit the same to do it at a fixed rate or at a variable rate, since I do not think that interest rates are going to exceed 5 % and making a mortgage at 3.5% or 4% fixed or variable is not going to make a difference”.

It is also highlighted that the home seeker has a fixed income, specifically, 91% have a fixed income, either because they have a permanent contract, because they are pensioners or because they are self-employed.

There is more property demand than supply

The current residential market is tense: there are more people who want to buy than offer. Although in some areas of Spain there is talk of a decrease in demand and this is true, but in part it is due to the fact that the supply is lower and sales are reduced, as experts points out. The latest figures show that the stock of homes for sale published out of the total existing residential stock stood at 4.81% in December 2022.

In terms of supply reduction, during the end of 2022 it fell by 7% year-on-year and most provincial capitals now have fewer homes for sale than there were a year ago.

In addition, the most sought-after type of home is second-hand in good condition (73.5% of those surveyed is what they demand), followed by used property to be renovated and finally new construction.

What about the new projects work? The expert affirms that the lack of new construction is moving to second-hand property. An imbalance that not only reaches the sales market, but also the rental market, where the number of people interested in leasing is increasing. Some, like young people, in a forced way. “Furthermore, many projects that under normal conditions would be destined for development are being transferred to rentals, with which the lack of supply of new construction for sale is becoming even more acute. Given this lack of supply, there is psychosis for fear of being homeless. And this mismatch causes price maintenance and even occasional increase of prices”.

Why is there no new properties being developed? The lack of projects on the market is due to the price of land, construction costs and financing costs, which are very high. In the experts opinion, at the moment, the developer loan is above 5.5% and the costs linked to the building in the month of November have been 8.42% higher than in the same month of the previous year and since May 2020 they have risen by more than 20%, according to recent data published.

What type of property is demanded by price range

The survey also shows that the home that is most sought after is the one that is worth between 100,000 and 200,000 euros, followed by those that are advertised for less than 100,000 euros and in third position, those that have a price between 200,001 to 300,000 euros.

The experts points out that "there is a price range in which a certain 'slowdown' is being noticed. If we are talking about homes of up to 200,000 euros (approximately), we are referring to people with a very low income, to whom the rise in rates affects them to a greater extent, making it difficult for them to access a home through a mortgage loan. But from 200,000 - 300,000 euros onwards, both Spaniards and foreigners continue to trust the property market as a savings and investment instrument, in addition to replacement buyers and the buyer/investor profile with high purchasing power, who manages other budgets and commitment to the security offered by prime areas, which will always be in high demand”.


Even when predictions for 2023 were gloomed, the property demand has been maintained, especially on the high end part of the property market and Marbella seems to be reaping the benefits for this demand. With the current political and economic instability and the conflict between Ukraine and Russia, investors are looking intensively at an escape home in Spain and even the British buyers seem to be on the rise. On top of the comments above, a recent change on the Golden Visa rules in the neighboring countries, have put back the focus from foreign investors in the Spanish Golden Visa and the Marbella property market, so as the number one real estate rule says: DON’T wait to buy real estate in Marbella... BUY now and then wait…

If you are considering investigating some of the interesting investment options we can offer you in Marbella, please contact Xcape today.

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