Property market 2022 round-up: Best results in 15 years

ESTATE agencies have enjoyed their biggest boom in half a generation with home sales soaring in 2022, according to the National Statistics Institute (INE).

Growth in the residential property market was at its strongest in five years, and sales numbers highest in 15 years – even though a slowdown in December affected the total annual figures.

In total, last year saw 649,494 homes sold – the highest number since 2007, when the last major property boom began – representing a year-on-year rise of 14.7%.

Enthusiasm in the market cooled considerably in December, when sales shrank by 21.3% on those of November.

But the final month of the year is not typically one of the busiest in the property industry, given that the general public's minds are largely occupied with the early-December bank holidays and the upcoming festive season.

This said, sharp interest rate rises – the greatest seen in nearly a decade – took their toll on buying and selling rates, as mortgage repayments have experienced a dramatic increase as a result.

How 2022 compared with the previous two years 

A major slowdown was inevitable in 2020 with the pandemic bringing months of severe restrictions on movement and trade, including a complete ban on property viewings from March to May inclusive; the outcome of this was sales plummeting by 16.9% that year compared with 2019.

Re-opening of non-essential trade and gradual relaxing of Covid-linked restrictions would see home sales soar by an unprecedented 34.8% in 2021, following a very unusual year in which pent-up demand was finally released.

Yet sales did not stagnate completely in 2020 – around 420,000 residential properties still found new owners.

The following year led to 565,485 homes sold, and 2022 would bring an increase of 84,009.

INE data show that the most recent annual total of 649,494 was last surpassed 15 years previously – by the end of 2007, at a time when property values had nearly doubled in under two years on average, sales had rocketed to around 775,000.

Other than the growth between 2020 and 2021 – which was not market-driven – the highest increase in percentage seen since the end of the last property price boom was in 2017, when a gradual post-recession rise reached a peak at 15.4%.

Factors that drove the 2022 'mini-boom'

As well as the continual releasing of what property analysts have called 'repressed demand' during the pandemic, triggered by long lockdowns leading homeowners to reconsider where they really wanted to live, the main impulse behind the sharp rise in sales last year was a renewed attraction to pre-owned homes.

Whilst new builds did register an increase in buyers – 2.6% overall – it was second-hand homes that led sales, accounting for nearly 82% of the almost 650,000 properties changing hands; up by 17.7% on 2021.

Once again, the number of non-new residential properties sold was at its highest since 2007, totalling 532,459.

New builds, however, also proved more popular than ever, with 117,035 of them bought in 2022 – the most since 2014.

December downturn

It was not entirely optimistic in 2022, though. The month-on-month 'crash' in December was the greatest since 2007, when the final 31 days of that year brought a dramatic drop in home sales, down 22.3% on November 2007.

The last month of 2022 saw just 43,370 homes sold – the lowest number since April 2021.

By contrast, November 2022 saw new owners pick up the keys to 55,132 flats and houses.

Year on year, the fall in sales for December represented around 10.2%, and broke a 21-month trend of constant increases in numbers.

The reduction was seen in both new builds and pre-owned properties, with the latter dropping by 8.1% compared with December 2021.

Delayed reaction

Whilst December may be looked upon as the darkest property-market month of the year, and spring and summer appear much more buoyant, it is likely that the lean months are in fact October or November, and the more lucrative season for homebuying in around February or March through to approximately August.

This is because, as the INE explains, residential property sale data are gathered several weeks after the new owners have collected the keys.

A sale and purchase are recorded, for statistical purposes, as having been consummated on the day the house or flat is logged with the Property Registrar.

This can happen anything from two to six weeks after the deeds are issued following the transaction.

Who's buying, and what they want

Research compiled by the National Federation of Estate Agency Associations (FAI) has revealed the most common type of buyer at present, how much they spend, how far they rely on finance, and where they are buying.

Annual reports the FAI releases have shown, for some time, that the average first-time buyer is much older in Spain than in northern Europe, typically in their 40s and often already with children.

This is not so much due to inability to afford a home at a younger age – figures show that would-be buyers tend to see their first property as their last, or at least, one they plan to live in forever, rather than as a first rung on the housing ladder and an initial investment.

In keeping with this trend, the FAI's study showed that the typical buyer in 2022 was aged between 40 and 50, normally a couple – with or without children – who already had combined personal savings to enable them to fund a deposit higher than the usual minimum of 20%.

Between them, and with a mortgage of a lower loan-to-value ratio than the stipulated 80%, they would purchase a property worth in region of €168,522.

What they would get for their money depends upon where in Spain they are based, although the largest numbers of properties bought per 100,000 inhabitants were in the east-coast region of the Comunidad Valenciana (2,442), the land-locked northern region of La Rioja (2,014), and the southern region of Andalucía (2,010).

Sales and purchases were up in every region in 2022 except the inland single-province territory of Navarra, where they shrank by 0.5%.

Where the growth is

Although the Comunidad Valenciana's three provinces of Alicante, Valencia and Castellón saw the largest percentage of new homes per inhabitants, its annual growth was the third-highest, at 23.9%.

The Canary Islands led the field for growth percentage (31.6%), followed by the Balearics (25.6%).

Whilst the Comunidad Valenciana recorded the greatest rise in sales on the mainland, the second-highest was in the polar-opposite region of Asturias (20.6%), on the north-western coast, very rural, green and northern European-looking, and with much cooler summers and colder winters.

The least growth was seen in Madrid, with only 2.7% more homes sold than in 2021 – a region where purchase prices are typically among the highest and which has seen a fall in buyers since lockdown. With the spike in remote working forced on office employees by the pandemic, having a job in Spain's capital may no longer mean needing to live within commuting distance of it; in fact, data have shown that since lockdown 2020, many existing homeowners choosing to move were doing so for this very reason – they now had the option to live where they wanted to, not where they had to.

Despite being next door to the mainland region with the second-highest growth, Galicia, in the far north-west, reported the second-lowest, at 8.6%. As a popular staycation and holiday-home destination, property prices in Galicia are among the highest in the north, making reduced sales at times of higher mortgage interest rates inevitable.