The Real Estate Market in Barcelona: Navigating Uncertain Waters – 8 Reasons Why We Don’t Expect a Possible Downturn!

Barcelona’s real estate market is currently at a crossroad, with contrasting forces shaping its future. While some anticipate price stability for the next two years, several factors suggest a possible downturn. In 2023,  BCN was one of the 30 metropolitan cities in the world where the prices increased the most (Knight Frank). 

Here are a few important factors to consider: 

Energy Crisis:

The ongoing energy crisis is casting a shadow of uncertainty. Soaring energy costs can strain household budgets, potentially influencing housing decisions.

Inflation and Interest Rates:

Spain, like many others, is grappling with inflation and rising interest rates, which will impact the affordability of properties. It is the first year in 40 years that interest went up by so much in such a short time (FED).  

Depletion of Pandemic Savings:

Many accumulated significant savings during the pandemic, which fueled property sales to foreigners in the post-COVID period. However, as these savings diminish, it could lead to more cautious spending.

The wars around the world:

Geopolitical uncertainty always affects prices, but also creates opportunities. We see many buyers and renters in Barcelona from Ukraine trying to escape from the war.  We also still see many Americans applying for Golden Visas, as well as an increase in investors from Israel looking for good deals in Barcelona. 

Still cheaper to buy property in the real estate market in Barcelona:

The average m2 property price was September 2023 according to “Global Property Guide” € 16,530 in Zurich,  € 10,240 in Paris, € 7,850 in Copenhagen, and only € 3,938 on average in Barcelona. So as you can see the prices for real estate are still 50% of many other cities and we also see lots of buyers right now from Switzerland, the USA, and the Scandinavian countries. This has been an ongoing trend in Barcelona, if you would like to know more about the comparison to other cities, you can read our blog about why real estate prices in Barcelona are 50 % lower than in other big cities.

Low property tax:

Barcelona is still a very popular city; a great opportunity for investment with a high quality of life. Property taxes are increasing around the world, making Barcelona a great investment. You pay 60% less than what you would pay in Denmark for a same-size property! You do pay a high transfer tax in Barcelona, but when you have the property, you have few expenses.

The food and entertainment costs remain lower than in most metropolitan areas: 

You still have the weather, the beach, nightlife, and culture, all at price points substantially lower than many other trend-setting cities. The real estate market in Barcelona also offers incredible architecture.

In essence, Barcelona’s real estate market is influenced by a dynamic interplay of factors. Investing in real estate in Barcelona is a safe solution, especially at a time when the world has become unpredictable. We don’t expect to see huge changes in prices for properties in Barcelona for the next year, making now the perfect time to invest. However, whilst price consistency is expected, vigilance and adaptability are crucial for both residents and investors as the market navigates these turbulent waters.  We do expect to see lower prices for the local market away from the city center, while we expect the popular areas for international clients to maintain the prices! 

Written by: Tine Matthiassen, Dominic Mcmillan