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What’s happening to property prices on Spain’s Costa del Sol in 2021?

A glance at the latest statistics for the Costa del Sol property market shows a very different story to 2020, the latest real estate stats reveal. Andalusia real estate experts The Property Agent give The Local Spain the lowdown on the Costa del Sol's property prices in 2021.

estepona property prices 2021
Property prices in the coastal town of Estepona are up in 2021. Photo: Ramón Albiol/Unsplash

This time last year, Spain was just emerging from a 7-week total lockdown, and the real estate sector had come to a halt. Fast-forward three quarters, however, and the scenario is in complete contrast.

Property sales in both Malaga city and the Costa del Sol were buoyant in the first quarter of the year. And prices are on the up in the area. In this Costa del Sol Property Market Review Q1 – 2021, we look at the figures in detail and analyse what they could forecast for the rest of 2021.

The figures and the lifting of travel restrictions into Spain lead analysts to predict that “a quick recovery” is on the horizon.

Property sales are going up

The first three months of the year registered a busy quarter on the Costa del Sol. According to the Registrars Association (Colegio de Registradores) report for Q1, 7,208 properties exchanged hands in the area between January and March.

This represents a 14.4 percent rise on the previous quarter. The resale sector saw particularly brisk activity. The type of transactions soared by 18.3 percent.

Yearly figures aren’t quite so positive. Sales fell by 18.1 percent between April 2020 and March 2021, although the decrease wasn’t as high as some analysts expected given national and international travel restrictions. However, there was much better news for new-build properties – sales skyrocketed by 26.2 percent in the year.

Lots of property sold

The Costa del Sol has some of the busiest sales activity in Spain, posting some of the best national sales figures in Q1 this year. In terms of total sales, 23,518 property transactions took place, the fifth-highest figure in Spain.

Sales of new-build properties reached 6,319 in Q1, the third-highest in Spain (behind just Madrid and Barcelona). The figure represents a rise of 26.2 percent in a year.

Sale figures are starting to show pent-up demand, which will only increase as Spain relaxes its travel restrictions from June onwards.

Figures point to both Malaga city and Costa del Sol property markets experiencing a quick recovery as soon as the health situation is back to normal. 

Costa del Sol property prices are on the move up

Spain publishes no official selling price statistics – most of those available are based on valuations or asking prices on online portals.

However, a look at some of the country’s valuation sources gives a useful overview of the situation. It also shows that the general trend for prices on the Costa del Sol is up.

Registrars’ Association (based on declared prices in title deeds): The average price reached €2,010 per square metre in Q1, which translates to an increase of 0.9 percent on Q4 2020 and 3.9 percent in the year.

Tinsa (based on valuations): Prices rose by 0.3 percent in the year to reach an average of €1,688 per square metre.

Gesvalt (based on valuations): Costa del Sol property went up by 3.6 percent in the quarter, the highest rise in Spain, to reach €2,019 per square metre. The increase was the fifth-highest average price in the country and ahead of Barcelona province.

Sociedad de Tasación (based on valuations): The Costa del Sol saw a price rise of almost 2 percent, the highest on Spain’s Mediterranean coast. Properties averaged €1,755 per square metre.

Fotocasa (based on asking prices): The property portal reported that prices for property in Spain generally reversed their downward trend in November and have since climbed every month. In Q1, those for the Costa del Sol went up by 1.4 percent.

property prices malaga 2021Malaga property has seen the highest yearly increase in Andalusia. Photo: Barbara Iandolo/Pixabay

Malaga city sees biggest price rise

Malaga city appears to have taken the lead in price rises for Costa del Sol property this year, a position usually held by Marbella and Estepona. According to the Registrars Association, the city saw a year-on-year price hike of 13.6 percent in Q1 with the average square metre coming in at €2,190.

Tinsa reported that Malaga property saw the highest yearly increase in Andalusia, 5.1 percent in Q1.

Outside the capital, prices rose too. Figures published by Idealista and based on asking prices show that the Costa del Sol saw an increase of 3.9 percent in the year to April. This figure was considerably higher in several areas:

Benahavís– prices leapt by 11.6 percent to reach €3,404 per square metre.
Estepona– the increase was 6.3 percent to €2,348 per square metre.
Marbella– prices saw a more sedate rise (4.1 percent) to €3,156 per square metre.
Sotogrande– property went up by 4.3 percent to €2,384 per square metre.
Bottom line? After months of a downward trend, Costa del Sol prices have returned to an upward trajectory.

The Costa del Sol’s excellent climate, location and quality of life makes it compatible with the rise in remote working for Spanish buyers looking for gardens and terraces. And for the foreign investor as a second home destination. Malaga on the starting blocks, Tinsa 11 May 2021

New build properties in Sotogrande and Estepona

New-build sales increased their share of the market in Q1. According to the Registrars Association quarterly review, they represented 27 percent of the market in Q1, considerably more than the 15 percent and 10 percent seen in the two previous years.

Malaga city and the Costa del Sol currently have a buoyant new-build market. Tinsa figures show that the area issued 6.2 licences per 1,000 existing properties in 2020, almost double the national average (3.3).

Some 5,640 new builds should be completed this year in a total of 264 developments along the Costa del Sol. Malaga and Estepona take the lion’s share with 1,174 and 1,089 new homes, respectively. Mijas will see the third-highest number of completions with an expected total of 835.

The Costa del Sol has one of Spain’s largest markets for new builds, a situation that looks to remain steady in the immediate future.

Foreign demand for property

The Costa del Sol attracts many foreign buyers and non-Spanish buyers usually represent around 30 percent of the market. The British account for the majority, followed by French, German and Dutch buyers.

Q1 this year saw severe travel restrictions. Spain closed her borders to British nationals from late December until late May and many other European countries advised against foreign travel. These limitations meant that purchases of Costa del Sol property by foreigners were lower than usual.

However, the percentage (25.6 percent) was only 1.68 percent lower in the year. And the Costa del Sol registered the third-highest proportion of foreign buyers in Spain after the Costa Blanca and Tenerife.

Despite Brexit and travel restrictions, foreigners (investors and second-home buyers) can’t get enough of property on the Costa del Sol.

Purchasing a second or holiday home remains a significant motivation for prime property purchasers. In a boost to the sector, the increase in remote working means that owners will be spending more time in their second homes. What Buyers Want, Savills May 2021

Marbella. Photo: Silviya Nenova/Unsplash

What’s in store for the rest of 2021?

As the figures in our Costa del Sol Property Market Review Q1 – 2021 , the Costa del Sol property market has started 2021 on excellent foundations. While sales and the number of foreign buyers have dropped, they remain strong.

This is particularly true for the new-build sector, currently, the main engine driving the market. New properties have surged in popularity among second-home buyers over the last 14 months, mainly because they offer more indoor and outdoor space than older properties. Having more room at home has become a priority for buyers the world over.

Prices too appear to have returned to an upward trend. However, there is a slight caveat – some analysts believe that resale property prices may continue to fluctuate down rather than up throughout the rest of the year. Much will depend on the vendor’s need to sell and the April figures from Idealista (based on vendors’ asking prices) certainly show that resale prices are not going down for the time being.

However, one factor is a given on the Costa del Sol despite the pandemic and travel restrictions – the area enjoys one of the finest climates in the world and has infrastructure and amenities to match. We, therefore, expect purchases of property in resorts such as Sotogrande and Estepona to climb steadily over the next few months reflecting pent-up demand.

As Tinsa said in early May, “figures point to both Malaga city and Costa del Sol property markets experiencing a quick recovery”.

This article has been written by The Property Agent , a real estate agency specialising in property on the Costa del Sol. If you are looking for property on the Costa del Sol you can contact them here HERE. 

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RENTING IN SPAIN

How to rent a property in Spain without a job contract

When looking to rent in Spain, property owners and estate agents often ask for a 'nómina' and work contract - something that can prove tricky if you're self-employed or not working. Here's how to prove your solvency and secure the rental.

How to rent a property in Spain without a job contract

If you’re looking for a house or apartment to rent in Spain, there can be a multitude of different factors to consider.

The price, the size, the location, the neighbourhood, which floor the flat is, on and whether there’s a lift, whether it’s interior or exterior, how many apartments there are per floor, whether to go private or through an estate agents and, of course, the search itself.

When you’re going on visits, you’ll have to contend not only with owner or agent trying to ‘sell you’ the place, but also explaining the terms and conditions (often referred to as las condiciones or requisitos para entrar).

In Spain, the process can be a little complicated. Often landlords ask for two months deposit upfront, and those that go through an intermediary estate agent tend to ask for two months, plus an extra month (plus VAT, or IVA as it is in Spain) that goes to the agent! It certainly adds up. 

Not only that, but very often in Spain you are expected to prove you will be able to pay your rent every month. And it’s not as simple as you might think. 

Most estate agents or landlords think hat the best way to ascertain this is by you providing proof of an employment contract (contrato laboral) and recent payslips (la nómina) that demonstrate you are paid the same amount every month, and that it’s enough to cover the rent and other expenses.

Here’s where things can start to get tricky for self-employed people (known as autónomos in Spain), who number more than 3 million in Spain.

Regardless of whether your monthly autónomo earnings are high pretty much every month, regardless of how consistent they may be, or even if you have regular clients, the irregular and insecure nature of Spain’s work market have ensured that landlords and realtors take a rigid attitude towards the rules.

This is especially true following the turbulent economic times of recent years as we’ve moved from global pandemic to war in Europe to spiralling inflationary pressures on the global economy.

Landlords want to be sure you can pay the rent. Therefore, they may favour a waiter with a nómina of €1,000 a month over an autónomo who can prove monthly earnings double that for the previous six months. Doesn’t seem fair, right? 

READ MORE: Why you should be raising your rates if you’re self-employed in Spain

Well, that’s often how it can be in Spain. Fortunately, if you find yourself in this situation, there are various ways you can convince potential landlords that you are financially solvent enough to rent their property, with or without a fixed contract

The law

Now, it is not unheard of – in Spain nor anywhere else in the world – for an estate agent or landlord to try and squeeze more money out of you, or to add on some extra charges. In most people’s experience, Spanish estate agents and landlords are no better or worse than anyone else, but it’s worth keeping in mind.

It has been known, however, for some in Spain to try and get an extra month’s deposit by telling potential tenants that they need a nómina by law in order to rent a property in Spain, and that they’re doing you a favour by allowing it.

Simply put, this is not true. According to Spanish law, more specifically, La Ley de Arrendamientos Urbanos (Urban Renting Law), although many landlords require some form of financial insurance, there is absolutely nothing to say a nómina is necessary to rent a property in Spain. A deposit is legally required, but a nómina?

Helpful? Certainly. Legally necessary? Definitely not.

That said, if you explain to the property owner that you’re self-employed, some landlords maybe be willing to make other arrangements to ensure the rent.

Here are some options, and other bits of paperwork that could help:

Aval bancario: Like a bank guarantee, some landlords request tenants without nóminas or work contracts to set up an aval bancario.

You must pay in an agreed amount (often worth the value of two or three months of rent, sometimes more) into a bank account that you’re a customer with.

It’s money that you cannot touch for an agreed period of time and which you pay some interest on, and in the event that you do not pay your rent, the landlord will be able to access said funds.

This is not the cheapest way to rent a property, but it may be one of the more effective ways of convincing a landlord to accept you as a tenant.

If you pay your rent diligently every month and prove that you are reliable, after a year you should speak to your landlord to ask them them to cancel the aval in order to not continue paying interest on it and recover your stored money.

Anuncios de particulares: If you’re using the usual rental search engines like Idealista or Fotocasa, the vast majority of rental adverts are from estate agents (inmobiliarias) who ask for all the proper documentation, including contracts and pay slips, and often the extra month’s rent as a fee.

When you’re making your search, keen an eye out for anuncios particulares , which are private ads direct from landlords.

Sometimes if you deal directly with the owner themselves, they are less strict about rules with regards to nóminas and contracts. Maybe you’ll get really lucky and find a landlord that takes a liking to you and who only asks for one month’s deposit.

Seguro de impago de alquiler: A landlord may be more likely to rent to you even if you don’t have a nómina when they have seguro de impago de alquiler, non-payment rental insurance. It protects the landlord for the duration of the contract and covers the rent and any repairs or legal fees.

IRPF: IRPF is Spain’s personal income tax, and providing your most recent income tax return could help put your potential landlord at ease by proving that what you’ve earned over the last year could cover the cost of the rent.

Seguridad Social: Similarly, providing proof of your social security payment can help prove your financial solvency.

Bank statement: a simple bank statement to show account activity – and that you have enough to pay the rent and deposit, of course – might ease the mind of your landlord as it allows them to see your incomings and any debts you might have.

IVA: Showing your VAT (IVA in Spain) returns could be another tool that, when used in conjunction with other ways of proving your solvency, could convince a landlord to rent to an autónomo.

Pensioner documentation: If you’re retired and you’re looking to rent, any official documents which show how much pension money you receive every month, along with bank statement reflecting savings, should suffice to convince a landlord or estate agent that you’re solvent.

READ ALSO: Renting in Spain: Can my landlord put up my rent due to rising inflation?

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