Spain is one of the countries that lives off tourism. It is very necessary that it be produced throughout the year, although it is concentrated to a greater extent in the summer months. But, do you know what causes the impact of tourism on housing prices? Or why have there been a lot of news related to tourism and housing lately?
If you've heard of it, but you do not have a clear idea of what they are referring to with tourism and how it can influence the price of housing, What we have prepared may help you understand it completely. Shall we start?
Tourism in Spain
Spain has always been one of the countries chosen by many foreigners to come to spend their holidays or as a tourist destination to discover the country. This is something positive, because if they come, they consume, they buy, they spend... and that money helps commerce and services.
Thanks to the beaches, the cultural diversity in the Autonomous Communities, the gastronomy and the historical heritage, it is one of the favorite destinations for many. And this is noticeable in the GDP (Gross Domestic Product), which represents (as of 2023 data), 12,8%, with almost 187.000 million in activity. That means that Spain needs tourism because it is one of the main (if not the largest) sectors of the Spanish economy. Without him, the country would be in serious trouble.
Before the pandemic, Spain had more than 80 million tourists annually, and after Covid, it is beginning to recover, so much so that, In 2023, it will already exceed 85 million.
Now, not all cities or parts of Spain are the most touristy. Tourism is concentrated mainly in Catalonia, the Balearic Islands, Andalusia, the Valencian Community and Madrid. Of course, there are those who visit other areas, but the bulk of tourism is in these that we have mentioned. And this implies that, if the GDP that we have mentioned before, was already a relevant data, when it is focused on cities or Autonomous Communities, this dependence on tourism is seen.
And what does the impact of tourism have to do with housing prices? We will tell you about it below.
The housing market in Spain
In the previous section we have briefly summarized tourism in Spain and its importance. But now we want to do the same with the housing market so that you have both data separately and can see, in the next section, the impact of tourism on housing prices.
To start, you should know that The real estate sector is one of those that suffers the most ups and downs. If we look back, house prices used to be much lower than now. And yes, it is true that with the passage of time, the quality of life, etc. they are revaluating. But they have reached a point where not everyone can access their own home due to the prices they have, especially in certain parts of Spain.
You may remember the economic crisis that occurred in 2008 and which was an even greater crisis for the real estate sector, to the point that home prices had to fall in order to be sold. And even so, it was difficult to get a house.
The problem is that After the pandemic, the sector has started to rise again and prices have skyrocketed in some cases. In fact, in areas of high tourist demand and in large cities (such as the capital or Barcelona), they reach prohibitive values for many Spaniards.
But it is not only the purchase of a home, but also the rental market, which has experienced an increase because there is less supply (fewer houses, apartments, homes...) but there is a lot of demand for them.
Focusing on the topic, one of the factors that influences the real estate market is tourism itself, especially in the most touristy areas, although in general it is throughout Spain. And because? Now yes, we will tell you about it below.
The impact of tourism on housing prices
Let's go to trouble. Why does tourism influence housing prices? What's more, we could say that it influences housing in general: its purchase, rental, price...
According to the newspaper El País, as of March 7, 2024, in one of its articles, it mentioned that Almost 3,7 million tourists have a home in Spain. It is called residential tourism. But that's not all. Due to the very high demand from tourism to have a place to stay during their vacations, this has meant that many apartments, homes, houses, single-family homes... that were previously intended for rental, are now touristic, with different regulations, and not being intended for long-term rental.
What does it mean? That Housing rental options have been greatly reduced, especially in tourist areas.
What's more, if that is only at the rental level, home purchases, also due to demand, have increased the price, meaning that not everyone can afford to own a home. And since these prices can be high for the average salary of Spaniards, it is possible that, for foreigners, it is not so problematic because their salary is higher and they can afford it.
That is why there has been a lot of news lately (the Canary Islands come to mind right now) complaining that there is no housing for Spaniards. And that foreigners are hoarding purchases and rentals, preventing them from accessing them.
In summary, we could say that, The high demand, not only from nationals, but also from foreigners, for housing, has caused prices to rise almost prohibitively for many. And the houses become less accessible for Spaniards.
Furthermore, the fact that more and more homes are used as vacation rentals decreases the supply of homes. In other words, the fewer homes there are to rent or sell, and the more people want them, the more the price rises.
But that impact is not only in prices. But, in the long run, it can lead to gentrification. That is, the neighborhood or the entire area changes. For example, if there are many English tourists, the neighborhood begins to have more businesses where English is spoken over Spanish. Or that they bring products from their land against the Spanish). Right now “Chinatown” comes to mind.
Is the impact of tourism on housing prices now clearer to you?