Costa del Sol Property Market Update 2024

What has happened so far in 2024?

It should be said from the outset that this is of course a very subjective topic, as if you speak with an agent who has recently had clients buy an expensive villa they will tell you the market is booming! Also it is not in anyone’s interest who is in the business to talk negatively about the market.  I have tried to keep this brief article as objective and unbiased as I can. It is based on having an overview of activity from multiple traffic streams including our web site and all of the major portals offering property on the Costa del Sol. I have consulted with other leading estate agencies to help form my opinion, but at the end of the day, it is my current understanding and view of the market.

The first quarter of the year, January - March as anticipated, got off to a fast start with lots of buyer activity reported, given the slow closing months of 2023.

Buyer expectations still generally exceed what they actually get for their money. This is perhaps down to insufficient time to research and understand the market conditions, or not having had open and honest conversations with property agents prior to visiting the coast.

The theme of a limited supply of quality housing stock which was prevalent last year has continued. There was a particularly noticeable shortage of villas all along the coast in the price range of 500-750k Euros. Also without doubt, the bar has been raised for the entry level to get into the market.

In the second quarter (April to June) there was a noticeable slow down in buyer inquiry flow, especially in June. July was similar. We would expect this over the summer months, but lead flow has been noticeably down until the last week of July. However, it seems the quality of inquiries has improved, which from an agent's perspective is a good thing. Inquiring prospective buyers seem to be more prepared, with finances organised, proposed buying timescales and visit plans in place.

On 4th April we had the announcement of the proposed withdrawal of the Golden Visa scheme, whereby an non-EU resident investing 500.000 Euros in property can apply for a visa allowing them access to the Schengen area for up to 183 days a year with no restrictions. This caused a flurry of activity with buyers (and indeed everyone) uncertain of when the cut off date will be. At the time of writing it is still not know what the actual cut off date for application or issuing of Golden Visas will be. What comes after the Golden Visa will be subject to a separate blog post.

So what’s the market like at the moment?

It depends! Are you looking to buy, sell, rent or invest?
The answer is somewhat different depending on your intentions and of course who you speak with.

General volume of buyer inquiries from portals across the board is down which is typical for this time of year. On the other hand, as an agency our number of client referrals for both buyers and sellers is up, which is very satisfying.

The coast is getting busy. The inbound flights are full, traffic is building up and you need to book your favourite restaurants and beach sunbeds well in advance!

As August has been approaching you could almost feel the Andalucia holiday mode easing in! Everything here almost grinds to a halt in August in Andalucia, or at least anything to do with banks, notaries and administrative offices. It makes it challenging for buyers, sellers, agents and lawyers who are looking to progress or conclude transactions. In addition, with the tourist season in full flow, it becomes harder (sometimes impossible) to access properties which are for sale, as owners have rented them out to holiday makers.

What will happen for the rest of the year?

My intuition tells me that, in the main, property prices will remain stable due to simple supply and demand economics. There is still a shortage of premium properties. Where we see individual property price drops, this is not indicative of a market decline. In fact it is an indication that the market is working as it should and that it is showing some vendors that they have been over ambitious with their asking prices.

Property buyers

I anticipate that buyer inquiry volumes will resume to more normal levels from September / October when the realities of weather patterns in colder and wetter climes set in, but that remains to be seen.

Having lived on the coast for the last 20 years, it is so easy to sometimes forget why people from all over the world are drawn here, how blessed and fortunate we are to live on this amazing coastline. Even the Spanish who reside in the north of Spain that I meet through golf when they are here for their holidays comment on how incomparable the lifestyle enjoyed on the Costa del Sol.

In June 2024 the ECB stated that inflation had come down by 2.5% and they took the decision to lower interest rates by 0.25%. The BOE also cut interest rates by the same figure at the end of July, whereas the Federal Reserve held off from rate cuts. The general view that interest rates will come down further over the coming months will be positive for the local market in terms of local affordability of Spanish mortgages. Also lower repayments in home countries will free up funds for Spanish property purchases. Our mortgage specialist contacts can at the time of writing secure competitive rates of 3.5-4.5% for clients. The impact of the sharp fall of US stocks on Monday 5th August with other world markets and crypto assets following suit is yet to be seen and is unlikely to play out for a few months.

Working with a proactive, well connected agent is a critical part of successfully securing your ideal property. Established agents with good professional relationships have access to pocket listings and properties from other agents which might not be openly advertised. That being said, it is just a reality that in some cases you might need to visit the coast 2-3 times in order to secure your ideal property.

Property owners thinking of selling

Perhaps there has never been a better time for property owners considering selling to put their property on the market. The market dynamics are in their favour.  Buyers in general are informed and demanding, but where the properties fit their criteria, asking prices, or close to it are being achieved due to the lack of supply. Again proactive agent representation is absolutely key to give your property the right exposure it needs to be noticed by buyers and other estate agents.

Investors

For investors there are still some great opportunities in certain areas of the coast where we see further price growth.  Investors ready to move and closed deals are always at an advantage. We have access to a limited stock of bank properties where superior value can be obtained with uplifts that can be expected over the short to medium term. However, dealing with banks requires patience and reams of documentation to navigate their bureaucratic processes.

 

Renters

It’s a tough market for those looking to rent at the moment. Rents have increased significantly, simply due to lack of supply. At this time of year it’s almost impossible to find long term rentals with landlords often focusing on the lucrative short term holiday lets. This is a systemic challenge caused by the growth and popularity of the coast and offers an opportunity for investors. There are recently announced regional government initiatives to increase the development of affordable housing.

 

Summary

Despite a slowdown in buyer inquiries, there is still plenty of buyer activity on the Costa del Sol. The limited supply of quality housing stock remains a challenge. Buyers seem to be increasingly more prepared, perhaps as they have experienced the disappointment of missing opportunities in the past. Property prices are expected to remain stable due to supply and demand, with premium properties securing their prices. Sellers can benefit from the market dynamics, while investors are still finding opportunities.

If we can be of service to you in either buying or selling a property on the Costa del Sol, please do reach out to us for an initial discussion.