Eight trends that will shape the residential market in 2022

The stabilization of prices and sales and purchases or the rise of professionalized rental management and build to rent, some of Solvia’s forecasts that will determine the evolution of the sector this year.

The real estate sector has shown 2021great resilience. In just a year and a half, it has been able to recover and even improve its results compared to the years prior to the pandemic, reinforcing its role as one of the main drivers of the economy.

Throughout this process, the residential market has been one of the main protagonists, recording figures above initial estimates. 

While prices have grown slightly, remaining practically stable with increases below 5% year-on-year, the number of transactions has marked, according to INE figures, a year-on-year increase of almost 40% during the first ten months of 2021, and of almost 10% compared to the same period of 2019.

A positive trend that has its origin, as pointed out by the Bank of Spain in its latest Economic Stability Report, in a dammed demand with new housing needs, in a better savings rate of families and in the good financing conditions currently offered by banks. 

The rental market, for its part, also saw how the health crisis halted the upward trajectory it had followed in recent years, with price declines of between 4% and 5% according to the latest industry figures, and experiencing a slower process in its recovery after the arrival of the new normality. 

Looking ahead2022, everything points to the fact that the progressive economic recovery, together with other factors such as inflation, the supply crisis and the new Housing Law, could draw a new roadmap for the residential real estate market. On the occasion of the arrival of the new year, Solvia’s experts identify the main characteristics that will mark the sector:

  1. Stabilization of sales and purchases. Spaniards continue to opt for buying and this has been reflected in the number of transactions in 2021. This year, the trend will continue. However, this upturn will not be as sharp as in recent months, with a more moderate increase, within an estimated range of growth in the number of transactions of over 5%. 
  2. Rising property values, with more moderate increases. Although this indicator will be conditioned by several factors, such as inflation, the influence of the end of the moratoriums in the second half of the year or the shortage of supplies, forecasts seem to indicate that housing prices will continue to rise. However, with small fluctuations, showing moderate increases of approximately 3%, which could reach up to 6%, according to the recent forecasts of the Spanish Association of Value Analysis (AEV). 
  3. Rebound in mortgage transactions. The year 2021 has not only been characterized by the increase in the contracting of new mortgages (+26% year-on-year in October and +20% compared to 2019, according to the Association of Registrars), but also by the increase in novations or subrogations. This progress, caused by the growth in demand for housing, the facilities now offered by the law regulating real estate credit contracts or the favorable conditions offered by banks, will retain its positive context in 2022. Above all, in the contracting of fixed-rate mortgages, since, in contrast to the stability of spreads on variable-rate mortgages, these are reaching the lowest levels in recent decades. 
  4. Increase in housing supply. Although the Bank of Spain warned at the end of 2021 of a housing supply with little dynamism, especially with regard to new housing and single-family properties, a type of asset that has begun to arouse great interest in the market, it also pointed out that this path would change in 2022, at least in the medium term, thanks to the implementation of the Housing Rehabilitation and Urban Regeneration Plan, which, backed by the Next Generation European funds, could boost residential activity, both in rehabilitation and new construction. 
  5. Recovery of the rental market. Although it remains to be seen how the new Housing Law will affect the rental market, which is expected to come into force in 2022, forecasts indicate that this new year will mark a turning point, with a recovery in demand and, especially, in prices, which will experience a generalized increase of approximately 5%. First, in the large cities, and then in the rest of the country. 
  6. Growth of professional rental management. Currently, more than 90% of the rental housing stock is in the hands of private individuals. This makes it difficult to respond to new market demands, such as digital access to contracting and rental services, or the adaptation to issues related to energy efficiency or new legislation. These drawbacks can undoubtedly be solved through professionalized management, so the need for specialized services to manage properties will grow. 
  7. The rise of build to rent. The improvement in the rental market, the greater interest in newly built properties, and the increase in the professionalized management of leased assets, will make build to rent one of the major trends of the year. In fact, by 2022, the increase in investment in this line of business will exceed 10% according to the latest estimates. 
  8. The digital transformation of the sector, more real than ever. The COVID-19 health crisis accelerated the digital transformation processes in many sectors, including real estate, leading many traditional real estate companies to seek new alternatives to attract clients and facilitate processes. It is expected that during 2022 this trend will take hold, allowing, among other things, the signing of mortgages telematically, virtual visits, professionalized management of potential buyers or tenants, or the use of machine learning to predict demand.