This time last year we were well into the first week of our severe lockdown. The Fallas fiestas had been cancelled on the 10th of March after quite a few Mascletas had already happened, Levante had played their last home game on the 8th of March with 3000 fewer fans than normal, many choosing to avoid the match due to fears about the new virus and on the 14th of March the Spanish government ordered lockdown… and it started to rain in Valencia…
It then rained for around three weeks as if the weather was either in mourning for what we had lost or was cooperating on making us not want to leave our homes.
The lockdown in Spain was severe, so severe that everything stopped. It lasted just under three months from the 14th March and the State of Alarm was finally lifted on the 21st of June with various steps working towards that date. (Conveniently in time for the summer tourist season so we could prep for further lockdowns later in the year.)
Children under 14 were allowed out of the house for the first time to take a walk on the 26th of April after over six weeks at home, I remember that date because I was stopped by police with my daughter as she looked older apparently. Phase one of deescalation started on the 11th of May with the opening of some non essential shops and bar terraces with reduced capacities and the deescalation phase of steps 0-3 was due to last eight weeks. Some schools went back for the last week of the summer term but most pupils only went back to school in September for the Autumn term.
We opened Spain up for the summer and almost immediately cases started to rise again so much so that greater restrictions were put in place from July with mask wearing becoming mandatory in public among other measures. As a result of the increase in cases in October a partial lockdown was put back in place nationally with regional governments given extra powers to impose regional and local lockdowns as required.
The State of Alarm continues to be in place even now and Valencia is still closed off from the rest of Spain unless you can prove a good reason for travelling into the province. This situation will continue until after Easter to avoid people carrying the virus around the country. The vaccination process is slow but steady and if people continue to follow the restrictions as they have up to now we may get to the stage where some sort of normality returns by the end of the summer.
The Valencia Property Market, Valencia Lifestyle and Covid19
We wrote an article last week telling you the current situation of the property market in Valencia. In short, it has exploded! But the nature of the market has changed radically and that is what we are going to explore in the next few paragraphs, what didn’t we know until a Pandemic came along and reminded us of certain things that are important?
What We Didn’t Know
Firstly, we never knew that lockdown would be so brutal and long lasting. Spain had a real lockdown with everybody except key workers forced to stay at home for at least ten weeks! That ten weeks is the key factor that has influenced the market since. Everybody remembers that period of enforced isolation. Everybody remembers living on top of each other in properties that were not suitable for families that size. Everybody remembers not being able to study, work or give classes in peace. Everybody remembers not having their own space!
Travel Would Be Suspended For So Long
Nobody expected travel restrictions to last so long. The rush to open up Spain so that the summer season wouldn’t be a total loss was unfortunate but it taught Spain and probably the rest of the World one thing, in an interconnected world we can be anywhere in 24 hours but so can the virus, carried in metal tubes over Europe and moving faster than the measures being put in place to restrict it.
Spanish people used to live on the streets, meet up with friends in large groups, share food via Tapas, share drinks in Botellones and Cuba Libres, shout loudly inside unventilated bars and restaurants over the noise of everybody else and they were very touchy feely; kisses, hugs and strong handshakes were of course the norm.
All of that is at least temporarily forgotten. The elbow bump, the Namaste bow and the foot touch are now normal. I can’t remember the last time I shook somebody’s hand!
The comfort of home has become much more important in the life of the average Spanish person. Big sellers this year in Spain have included, house plants, home furnishings, terrace furniture, better lighting, new kitchen equipment and washing up liquid. I know of people who never ate at home before the Pandemic who have now been forced to learn to cook more than just toast and coffee. And yet all of these newly acquired cooking skills have not been put into practice as we still cannot invite others into the home to share a meal.
The Explosion of the Property Market
I made a video in April last year and it talked about how the market would be depressed post Covid. I was wrong (Currently, I might add, that may change as the following factors change). I expected much higher unemployment leading to many sales of properties from people needing to get rid of costs. What I perhaps didn’t appreciate was the measures that have been put in place by governments (and banks) to support people during the Pandemic.
The Background to the Explosion
Go on admit it, you didn’t even know what a furlough payment was at this time last year. The mere thought of the government paying up to 80% of your wages in a private company would have been heresy. However governments took up the slack in many countries and started supporting people who, through no fault of their own, couldn’t work. Spain did this and continues to do so. There are those who fall down the cracks unfortunately but many hundreds of thousands, indeed millions, of people have been supported through the Pandemic by furlough payments.
Mortgage Payment Holidays
Millions of people were offered payment holidays on their mortgage payments. Initially the government put in place a scheme forcing banks to stop charging people their mortgage and other repayment costs if they satisfied certain criteria then the banks themselves offered similar conditions to those who didn’t satisfy the initial criteria, allowing people to pay interest only. With interest rates being so low this meant people were only paying a fraction of their usual mortgage meaning they have not become desperate to sell something they cannot afford to pay for.
Of course there are those who lost their jobs and had too many other payments so were forced to sell but banks have been restricted from repossessing by government legislation giving protection to many.
People Have Realised of the Value of Their Home
It is often said that people don’t realise the value of something until they don’t have it. In the case of property though, the realisation of the value of a property came out of too much familiarity with the current property that people were living in. Let’s just say that many people in Spain realised that their current property just wasn’t suitable for a new style of living where work, study and eating was done at home.
So they started looking for a bigger, more suitable place as soon as opening up in June 2020 came around and haven’t stopped since because, as we said above, they remember every single minute of that first lockdown.
“They want their property now to act as their restaurant, their gym, their office, their study centre, their entertainment and more.”
This required a move in many cases, flight from the city to the suburbs where the houses have outside space, are larger and have lightning fast internet, flight to larger city properties and even better if they had terraces to spend time outside and get fresh air and flight away from their previous lifestyle goals of being near to everything. When everything has to come to you in your home rather than you going to it then location became less important.
Interest rates on mortgages are low, very low. People who have the opportunity to buy property are likely to find that the amount they pay in mortgage repayments is much lower than the rental they were paying in their rented flat! As long as interest rates in Europe remain low and bank finance remains available people will continue to buy property if they can especially when you consider that prices are likely to get higher due to all of the money printing of the ECB, Bank of England and The Fed in the States. It looks like we are in for some years of inflation and if you have a very low interest rate on your mortgage and inflation boosts the price of your house then property will be seen as a great hedge as well as just a place to live.
Remember, people haven’t spent any money on anything for a year apart from essentials! No holidays, no new cars as the old one sits in the road doing nothing, no restaurant meals (Lots of takeaways though), no mortgage payments, no days out with the family, and even no coffees in bars during the day for much of the year. This, along with mortgage holidays and furlough payments, has meant that many people have been saving and they have managed to save that deposit to buy an apartment for their kid who has been annoying the hell out of them all year while treading on eggshells in the family home. As we said in the last post, Spanish moms like their kids close to them but even for them this year has been too close!
In 2008 after the financial crisis governments installed austerity as a mantra. Cutting costs, cutting public spending and forgetting basic Keynesian economics of stimulus! It didn’t work and the recession was made much worse because money wasn’t flowing around the system.
Stimulus is the word now! The U shaped recovery post 2008 meant that economic activity didn’t return to pre 2008 levels in many paces for a whole decade or more. The stimulus packages in Europe, the States and much of Asia this time around means that economies will recover more quickly always assuming the vaccination programme allows countries to open up more quickly. We didn’t know that this would be the response of governments to the Pandemic but as long as it continues to be the general status quo the inevitable pain, which will happen, will not be as bad as post 2008.
Numbers of Sales
Last year we thought that we would make many fewer sales than the previous year. However despite three months of almost total lockdown we made as many sales in 2020 as we did in 2019 and 2021 looks to be on target for something similar or better. Also because people are looking for bigger and better properties the average sale price is rising. Anecdotally we know of other agents talking of double the number of sales in Valencia compared with the same time in the previous two years and with strong demand continuing into the Spring. If you want to be one of those sales figures for this year contact us for an initial consultation.
There, I’ve said it again, “You Only Live Once“. Foreign buyers are much more likely to buy now than prior to Covid.
If not now, then when?
They have realised that putting off their purchase in Spain meant that they couldn’t be here for lockdown in a better climate, a more forgiving culture and a cheaper cost of living than many other countries. They have also realised that life is short. All over Europe people are now asking themselves, if I can work from anywhere why am I limited by proximity to my workplace?
Foreign workers from Holland, Germany, the UK, the USA and many other countries see Spain as a great combination of lifestyle, climate and work as they continue to work remotely and at the same time in their home country.
We sort of did suspect it would happen but are happy to see it in action now. Brits, disgusted by the way their country is going post Brexit, are upping their budgets and upping sticks and going over the 500k level in order to get their passport to Europe, the Golden Visa, which has been taken away from them. What we didn’t possibly suspect was the actual demand for the Golden Visa would be so high.
Much has changed but certain things will never change. Lifestyles have had to adapt and most people are hoping that change is just a temporary hiatus before we get back to “normal”. However there are aspects of the current situation which suit a lot of people too, less travel to and from work, better working conditions and introverts are happy that they won’t have to think up excuses to avoid going to parties!
The downsides of the pandemic are huge of course and this article isn’t here to minimise or dismiss them. Social isolation, precariousness of jobs, the mental health burden especially for those living alone or even those in overcrowded accommodation are realities that effect so many people. We will see how they develop over time and what it means to get to know people again after opening up. Will the two kisses, handshakes, hugs and more come back into vogue or will new ways of greeting stay in place? I am sure we will find out eventually but until then, get your vaccination when offered and then get out there and support your local businesses.
Golden Visa Property of The Week
OK, so this one goes well above the Golden Visa limit but if you have deeper pockets and want the Spanish Golden Visa as a side effect of buying your perfect coastal property in Javea then this villa could well suit. However, we will let the description provided to us speak for itself below. If you want to let the photos speak for themselves just click on the image or here to see more photos.
“The imposing hall with the staircase in the background and the mixture of its materials are the greatest prelude to what awaits us in its interior. Its spacious “open plan” concept room and its elegant and timeless design enhance its virtues. The individual kitchen has a central island and dining area all open to the terrace. This same floor has a double room that can be used for various purposes and a bathroom completes the main floor.
The upper level is the most intimate of the house and includes the large master suite with dressing room, sitting area, bathroom and private terrace. It also houses two additional double bedrooms, with a bathroom for common use.
The integral stairs lead us to the lower level with a master suite with bathroom, laundry area and large multipurpose area with different study, leisure and living areas. From here a large window connects the interior with the exterior and gives us access to the pool and garden area.
The fusion of materials is also contemplated in its exteriors, in which all its terraces are clad in teak with the contrast of the green of nature and the turquoise of the pool.”
Yeah, we wouldn’t have written that. We prefer less floral language and sometimes it can be a bit more direct but it couldn’t be as entertaining as someone trying to be Lord Byron while describing a house.
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