Updated: Apr 4, 2021
This will be a way shorter edition published online than the previous one; more detailed analysis is available on request (subscribe to the mailing list or send a message).
Since my last piece in Autumn we had big news: vaccines have driven a huge change of sentiment also if we are experiencing a never ending mild lockdown, that is still procrastinating. The semi impossibility to travel and the low season have brought a drought of transactions (large part of real estate brokers remained semi-closed).
Since march something is moving and i have testified some absorption, driving prices upward.
At the same time legal and regulatory questions are arising (the much debated soft-expropriation) while the economic and social divide is alarming notwithstanding the socialist economy established in large part of the developed world.
Long term problems continue to escalate and the government are far from moving in the right direction (well, right for who?). Here an example related to the land prices and availability that drive developers into the same price segment and product:
While foreign demand plummeted due to the travel restrictions, you can't forget that an average 30/40% of transactions are coming from abroad.
To really understand the local real estate dynamics is fundamental to know the economic, financial and social trends happening in the origin countries of these buyers.
Look below at 2020 residential price increase in Europe:
Basically every market shown above is at new highs and people feel way richer, driven by asset price inflation created by all central banks worldwide. Foreigners price and value real estate not only in nominal and absolute terms but also in relative terms.
Thinking from the other side, a German could consider Balearic prices way cheaper than a year before, bidding up the prices... are you coming to the point?