The pandemic is collapsing the Girona real estate sector

The declaration of the state of alarm for the spread of the coronavirus and, with it, the confinement of the population from mid-March to June 21, caused the collapse of the real estate market in the second quarter of the l ‘year, judging by the statistics published a few days ago by the Ministry of Public Works, which counts in the counties of Girona 1,535 operations formalized between the months of April and June.

This is the lowest sales volume in more than seven years, as it dates back to the first quarter of 2013, when the trend was towards a slow recovery process after the puncture of the real estate bubble.

The number of transactions between April and June in the province of Girona represents a decrease of 36% with respect to the operations formalized in the first quarter of the year, when the health emergency accentuated the slowdown that was already pointed out in the sector , and 51.9% if we take as a reference the data for the second quarter of the previous year, when the ministry recorded 3,191 operations in the whole of the demarcation.
The declaration of the state of alarm paralyzed the activity in different sectors of the economy and real estate does not escape the effects of those first months of uncertainty in which increased demand apartments with balconies and houses with garden before the possibility that the confinement extended in the time.

On the other hand, the health emergency has not altered a reality that has been consolidated for a long time: second-hand housing is the only thing that pulls the sector by concentrating the vast majority of transactions that are recorded. In fact, in the second quarter of the year, transactions involving used real estate exceeded 95% of the total, while the new housing segment is virtually residual.

With regard to the impact of the collapse of the sector in the large municipalities of Girona, the fall in real estate activity in Figueres and Banyoles stands out, with year-on-year decreases of more than 60%.

The capital of the Alt Empordà is the city that has noticed the blow the most. Thus, between April and June only 45 real estate transactions were formalized, which is a decrease of 56% compared to the first quarter and more than 67% compared to the second quarter of 2019. Very similar figures presents Banyoles, with a decrease of operations of 55% compared to the first quarter and 64% annually.

For their part, Girona and Lloret, the two municipalities with the highest activity in the Girona counties, showed quarterly decreases in activity of close to 30%, and an annual fall of between 45 and 48%.

And how has the fall in transactions affected sales prices? The latest report Tinsa IMIE Local Markets says that for the first time in the last five years, the average price of new and used housing in Spain has experienced a year-on-year fall.

6% decrease in Girona

The pandemic has lowered prices by 4% a year in Catalonia, with Girona being the province where they have fallen most sharply, to 6%, according to the Tinsa report.

A second study, in this case by the consultancy Forcadell and the University of Barcelona (UB), predicts that the price of housing will fall by 16% and that of rent by 18% in Spain between 2020 and 2021.

Rafael Gil, director of the Tinsa Studies Service, points out that the report just published by this company specializing in real estate valuations “is the first data on local markets that we have in a post-covid-19 situation, and the most relevant that it shows us that we are facing a general price adjustment situation ”.

Weak demand

Gil adds that the covid has caused “a conjunctural situation and occurred in a market that was stable; if it had been a limited crisis we would have seen a rebound in V, which is what we were thinking when the summer began, but this scenario is now ruled out by all economic bodies. In other words: “It looks like the impact will be longer-term, and we think the price adjustment will be a trend, with a weakness in demand that will persist at least over the next year. We anticipate that price falls will be more intense and lasting than we thought before the summer.

“For an entire quarter (coinciding with the state of alarm) there was even the physical impossibility of making transactions. Then we saw a rebound, but in a context of weak demand. When buying a home, it influences the job prospects of buyers, it influences consumer confidence, which is at minimum levels, so that demand falls and that is why we see this adjustment via prices “, he concludes.

At the presentation of the report by Forcadell and the UB, Professor of Economics Gonzalo Bernardos estimated that in the current year transactions will fall by 27% and that in 2021 will increase by 15%, as he believes that in the first quarter of the year, the pandemic could be brought under control, which will have an impact on a “large rise” in GDP. “This crisis is exclusively for health reasons and when tourism returns, it will do so more strongly than it did. Then the recovery of the Spanish economy will be very remarkable “, said Bernardos.


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