The View from Madrid
Continuing our ‘View from…” series, we take a look at Madrid, a city which saw its lockdown measures eased earlier this week.
2 minutes to read
On Monday, Spain became the first of the hardest-hit European countries to loosen its lockdown regulations, permitting workers in “non-essential” industries to return to their jobs after a two-week ban, this includes those working in construction and manufacturing.
According to media estimates, around 300,000 people have returned to work in Madrid; however, Spain’s ‘State of Emergency’ is set to remain in place until 26th April.
At its height, Spain saw more than 8,000 new infections in a day; this has now declined to around 3,400 in recent days. To date, 28% of Spain’s 172,655 Covid-19 cases have been recorded in Madrid.
Latest indicators
The only housing market data published so far for March comes from property portal, Idealista, which shows both Madrid and Spain registered marginal month-on-month increases in March, but slight declines when measured over a three-month period.
We expect sales volumes to slow significantly in Q2 and Q3 before gaining traction in the final quarter of 2020 but prices will prove more resilient, particularly in the prime segment. It is likely to be June before we have official sales data from the Ministerio de Fomento to gauge the true impact on transactions.
Source: Knight Frank, Idealista
New homes
News that construction workers can start building again means that Madrid’s 552 residential developments and 26,713 new homes, which were previously halted, can now recommence, helping to address the supply deficit that has built up in recent years.
At the prime end of the market, online viewing activity increased in mid-March. Spring usually sees an uptick in enquiries for Spain's prime markets and despite the crisis, enquiries continue and anecdotal evidence suggests buyers are researching the market in the current lockdown.
Government action
The government has to date introduced a range of stimulus measures including a €8.7 billion support package, which equates to 0.7% of GDP and this will be used as mortgage or rent protection for households and businesses, increased unemployment benefits and support for the self-employed.
Outlook
With the tourism industry accounting for 12% of Spain’s GDP, the lifting of international travel restrictions and consumer behaviour post the pandemic will be critical to Spain’s economic recovery.
Although the Spanish government is starting to ease regulations, we expect this will be a slow process with softer controlling measures remaining in place to reduce the likelihood of further outbreaks.
In other news….
- France has announced an extension of its lockdown until 11 May
- Italy will remain in lockdown until 3 May
- An EU-wide blueprint is to be published this week that calls for countries to co-ordinate relaxing border controls and the reopening of shops.