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Spanish Property Prices falling during Covid: what you need to know before you buy.

covid real estate market spain

A house prices paradox?

There is a common belief that during the current economic recession caused by Covid-19 property prices should drop. But then why do buyers struggle to find discounted (good) properties on the listing portals? Why don´t you see the expected price decreases? In this article I share my insights & analysis and use real-life examples from our daily practice as real estate Buyer Agents.

The reality is that:

Real Estate Listing Portals are a confusing indicator for today´s true market prices. They show generally over-valued asking prices and historic data, not the transaction prices agreed between buyer and seller. Over time, portals will provide a good trend view though, but that´s too late for your purchase decision.

Today´s economic recession has reduced local and foreign demand for Spanish properties, while on the supply side certain owners need cash and are willing to sell quickly, at a discount. This results in more power for the buyer and lower prices. In my April 2020 article “What Effect Will the Coronavirus Have on the Property Market in Barcelona?”, I expand on the implications for buyers, investors and sellers.

Valuation companies, who work for the banks when you apply for a mortgage, have started to systematically lower their property valuations. One large “tasadora” told me for instance they have instructed their teams to apply a universal correction factor of -6% to -13% on all valuations. Why? The absence of latest comparable market data (no transactions, no data) and the macroeconomic outlook of a shrinking GDP and increased unemployment.

Empirical evidence: well-prepared buyers have been successful in materializing big savings on their purchase prices in the last 3 months (June-August).

For Eveline we found an historic apartment in Poble Sec that was listed for 240.000€. After doing our homework and iterations of discussions with the agency and owner, the property was bought for 179.000€ (August 2020). For Dave, we found an off-market 108m2 apartment in Eixample for 410.000€ (deal price), which was valued between 451.000€ and 490.000€ by different of our big data tools and appraised at 440.000€ by the bank. We found it before it came on the market and the owners understood that an attractive discount now was best for them. Olivier bought an investment property, renegotiated the contract during the lockdown and obtained a cash benefit equivalent to one year rental income.

Today it´s no longer data, but deep expertise, strong feeling with the market and a vast network that are king to get the best deals.

An off-market properties revival. The best deals are frequently not published. Sellers in need for cash like discretion, turn to their trusted network first. Imagine you go shopping during the sales period and you can enter the shop a few days before everyone else is let it. These are often complicated and long negotiations, but with preparation, a sound strategy, empathy and persuasion, we manage to lock in fantastic deals for our buyers.

Why property asking prices are still over-valued

1. Agencies compete for properties. Instead of competing by offering a better service, agencies (over) promise the seller that they will sell the property for more. In a normal market, they then downgrade the seller´s expectations throughout the process of showing the property to candidate buyers. Covid-19 obliges them now to make a double correction: the overpromise and the lower market prices. Many agencies don’t have the guts to give their customers this bad news and apartments stay listed at the too high prices. Properties in Barcelona that were overpriced by 5% in March can now be by 10-15%.

2. The consequence of wrongly taking accumulated demand for sustained demand. Agencies saw a fairly strong buying activity in June and July and quickly assume that this will be the new normal. Therefore, realtors are not recommending owners to lower their prices. Chances are real that these buyers are part of the demand that was put on hold during the lockdown, i.e. people buying shortly after the lockdown because they were going to buy anyway (e.g. “arras” contract signed, need to move, personal situation, …). The economic outlook makes me think however that this is not solid future demand.

3. Six years of GDP decline condensed in 2020, ignored by home owners. Spain´s GDP will fall more in 2020 alone (-10 to -15%, depending on the forecast) than during the six years of previous crisis 2008-2013. And sellers surprisingly still underestimate the impact today´s recession will have. Sellers don´t drop their prices yet and first want to see what will happen, what others will do. They would be better off by accepting a lower price today instead of waiting till everyone else starts to lower prices. The new outbreaks of Covid-19 will prohibit a V-shape economic recovery and the economic crisis will last longer than Corona. I expect September-January to a very tough period, where many companies will find out that they actually can´t survive beyond the first Corona wave.

On the other hand, the recovery might be faster than in the previous crisis. Europe has acted as a club and the 750bn € support plan is unseen, both in terms of amount and the rapidness of the intervention. But let´s be realistic, with recession, higher unemployment and uncertainty, many people will cancel their buying plans while others will need to sell.

How to buy cheaper

Deal prices are down already but are mostly not visible. If you are serious about buying your dream home, an investment property or about changing from renting to owning, you shall prepare well and start looking for opportunities. Without rush. With caution. With a plan.

What´s next:

-> Join our REAL ESTATE SERIES, 4 interactive webinars, where I go deeper into 4 different aspects of the Spanish real estate market and buying process. Each episode, another topic:

2nd Episode – 6 October – 20h: “The Buying process in Spain” 3rd Episode – 4 November – 20h: “Mortgages” 4rd Episode – 1 December – 20h: “Real Estate Dilemas”

Join for free below:

-> For personal advice for your real estate projects, email me at More info & articles:

Raf Jacobs is an economist specialized in finance, a Board Member of the Spanish Association of real estate Buyer Agents, lecturer at University of Barcelona for the Real Estate Executive Program and is the Founder & CEO of Inspire Property Experts (previously Inspire Boutique Apartments), a real estate advisory firm helping you take optimal decisions and guiding you from A to Z when buying in Spain.


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