Real Estate Market Recession in Sotogrande Spain for 2023

Real Estate Market Recession in Sotogrande for 2023?

I always say back cast to forecast, and I need only look back at the last recession to understand clearly how another would affect Sotogrande. A recession causes significant decline in general economic activity marked by a drop in employment, income, retail sales, production, and the gross national product generally. We saw that in 2008. A recession affects every aspect of an economy, including the real estate market. In a recession people become unemployed and cannot pay their mortgages. In a recession, the demand for homes, and particularly second homes will decline and the supply for homes will increase. As a result, home prices will inevitably decline.

According to Charles, “In a recession the number of sales and the value of sales drop. If you are selling, the value of your property falls. This means that potential buyers will have better terms and choice. If you are a seller, you may not want to or indeed be able to keep your second home. Basically, the market becomes a buyer’s market.”

“Normally, if a prolonged period of international crises were to materialize, it would result in a worldwide recession and a collapse in demand for real estate as potential buyers become shy to invest. As a result, real estate prices could fall. In financial crises, however, the drop in demand for luxury real estate is delayed, and Sotogrande is a location for luxury real estate.” Stephanie says on her personal website.

How does a Recession Affect the Sotogrande Real Estate Market?

Sotogrande is by in large a second home resort, and recession can have a more dramatic effect than in a primary market. Anyone with economic difficulties will have to reconsider their circumstances. As a priority it seems logical that a primary residence will take precedent over a secondary home. Thus, anyone in difficulties would probably want to or must sell their secondary property.

Will the recession affect my mortgage?

Tighter lending practices is another major factor. Banks are more cautious in recessions. They are less likely to issue mortgages and applications are heavily scrutinised which could disqualify many.  Additionally, those with existing mortgages, particularly fixed mortgages could be hurt as governments try to lower interest rates to stimulate the economy. Renegotiation of terms is common however after a certain point, some people may lose their jobs leading to inability to pay and banks repossessing the property. 

Is the rental market free from the consequences of a recession?

The rental market can also be affected as rent delinquencies rise putting pressure on landlords and tenants. 

Our thoughts on the Spanish Real Estate Market recession impact.

In financial crises, however, the drop in demand for luxury real estate is delayed, and Sotogrande is a location for luxury real estate. Further, the only winners are those with liquidity, and the ability to buy cheap real estate when prices are down. These investors can make a lot of money as they sell for profit as the market recovers.

Noll Sotogrande Real Estate will be happy to help you make an intelligent decision when buying or selling your home in Sotogrande. Contact us, Charles. Mobile +34 607 911 661 / Email charles.gubbins@noll-sotogrande.com

 

Tags:Charles Gubbins
by Marketing Dpt. - Noll Sotogrande | September 2022