The impact of the COVID-19 health crisis on the housing market in Spain

Abstract

The residential real estate market has been affected by the COVID-19 pandemic, which broke out at a time when the cycle of this market was in a mature phase. Activity fell off sharply in the early months of the health crisis, owing to the effect of the restrictions adopted. It has since seen a slow recovery and remains highly influenced by epidemiological developments and the related impact on agents’ economic outlook. The pandemic has triggered manifest changes in the type of housing in demand, attributable to households’ new needs arising from the lockdown and increased remote working. As compared with other crises, prices are showing greater downward rigidity, particularly in the case of new housing, although the impact of the pandemic is proving highly uneven across regions. The pandemic-induced economic crisis has not driven up the cost of financing for house purchase which has continued to decline to record lows. Nevertheless, there are some signs of a tightening of credit standards and of some of the terms and conditions applied to loans.