The real estate sector is picking up momentum

In 2021, a milestone was reached that was hard to imagine a year ago: the mass vaccination of a large part of the population in advanced countries. Although new waves of infection are occurring, in those countries where population vaccination levels are higher it is likely that activity and travel restrictions as severe as those that have set the pace of economic development since the outbreak of the pandemic will not have to be reimposed.

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January 12th, 2022


  • Within this context of recovery, Spain’s real estate sector has performed particularly well, especially in terms of demand. We estimate that house sales could close the year at around 545,000, a figure not posted since 2008. Looking ahead to 2022, a few of the factors stimulating demand recently will lose some momentum, so we expect sales to return to their pre-pandemic levels of around 500,000.
  • Supply, on the other hand, is lagging behind this strong growth in demand but is also taking part in the recovery. This misalignment between buoyant demand and more sluggish supply has helped to push up house prices, especially for new builds. This upturn may continue in the coming quarters as a result of higher construction costs and the shortage of certain materials, linked to bottlenecks in global supply chains. In addition, favourable financing conditions will continue to support real estate investment. For 2022 we therefore predict an average house price increase of around 4% (appraisal value). However, looking more at the medium term, as new supply enters the market and tensions dissipate regarding the supply of certain raw materials, prices should return to a growth rate that is more in line with the trend in household income.
  • In this respect, some analysts have warned of the risks of a real estate bubble developing in some European markets. In this report we present an analysis of the upside and downside risks to house prices, using a methodology called House Prices at Risk (HaR), and conclude that the current conditions do not point in this direction for Spain, a conclusion that is largely due to reasonable housing affordability in aggregate terms.
  • As for the impact of the crisis on the financial situation of households, this time is different compared to past recessions, thanks to the economic measures implemented: fiscal policy has supported household income and monetary policy has kept interest rates low, easing the financial burden on households. In this report, we have carried out a detailed analysis, based on CaixaBank’s own internal data, of the effort required by households to pay off their mortgages and we have found that, in general, this burden has lessened for households during the pandemic, although there are still pockets of vulnerability among lower-income households.
  • We also shine a spotlight on the rental market, a highly topical issue. Although rent growth had already started to moderate in Spain before the emergence of COVID-19, the pandemic has accelerated this trend, as confirmed by the results of the analysis we carried out using CaixaBank’s internal data on rent payments. Furthermore, our analysis shows that decreases were particularly marked among the lowest rents and in the most tourist-oriented municipalities.