Buying real estate in Madrid
Madrid, the vibrant and bustling capital of Spain, has become a popular destination for expats seeking a new home. With its rich history, stunning architecture and exceptional quality of life, it's no wonder why many are choosing to buy a property in this beautiful city. If that also includes you, here's a quick overview of the market and what to expect.
The current housing market in Madrid
The current housing market in Madrid is experiencing a significant surge in demand and prices. Over the past few years, there has been a consistent increase in population in the city, with many people moving to Madrid for employment opportunities and the vibrant lifestyle it offers. This influx of residents has created a high demand for housing, causing prices to skyrocket.
One of the main factors driving the housing market in Madrid is the scarcity of available properties. The limited supply of housing, coupled with the increasing demand, has created a highly competitive landscape.
Foreign investment in the real estate sector has also influenced the rise in property prices in Madrid. Investors worldwide have identified the city as an attractive market for property acquisition due to its economic stability and cultural richness, among other factors. Expats represent about 15% of the purchase demand in the city.
Additionally, the impact of the COVID-19 pandemic on the housing market cannot be ignored. The pandemic has resulted in a change in housing preferences, with individuals now highly valuing spacious homes and access to outdoor spaces. As a result, demand for larger properties has increased, further contributing to the price rise.
However, according to forecasts by the Bank of Spain, Madrid's real estate market will decline in 2023. The chief reason is that mortgage interest rates are expected to continue to rise, making mortgages a lot more expensive.
Purchasing property as an expat in Madrid
Madrid is an attractive place for expats to purchase a home. Foreigners have the right to buy and resell both commercial and residential property without limits. However, it's important to note that buying property doesn't come with the automatic right to live permanently in the country, and you'll be responsible for securing your visa. Mortgages are available to expats who are planning to live in Spain full-time as well as for non-residents.
Property types and prices in Madrid
In Madrid, as in most cities, the most common living options are a flat or apartment in a residential building and vary from tiny studios to luxury penthouses. Other options include duplexes and detached and semi-detached homes. Real estate prices in Madrid are generally the most expensive in the country.
According to global property platform Properstar, the average property purchase price in Madrid is 3,873 euros per square meter for an apartment and 3,286 per square meter for a house.
Prospective buyers in Madrid can expect to pay the following prices for an apartment:
- Studio - around 210,000 euros
- 2 bedrooms - around 250,000 euros
- 3 bedrooms - around 297,000 euros
For a house:
- 4 bedrooms - around 915,000 euros
- 5 bedrooms - around 1, 400,000 euros
Where do you want to live in Madrid? Discover the best areas for your requirements by checking out the Spanish capital's different neighborhoods.
Buying a property in Madrid - steps to follow
The basic process of buying a home in Madrid isn't that different from other parts of Europe or North America. Among the key steps are:
- Decide on a price range and find a mortgage that fits your needs;
- Use a broker, website or adverts to find the property you want;
- Once you reach an agreement with the seller of your chosen home, sign a purchase agreement and make a deposit, typically 10% of the property price;
- Your lawyer will conduct a thorough examination of the property's legal status, including checking the property's title deeds (Escritura), verifying ownership and ensuring there are no outstanding debts against the property;
- Once all the legal checks are complete, you and the seller will meet at a notary public's office to sign the official deed of sale. At this point, you will also pay the remaining balance of the property price and associated taxes, typically around 10-15% of the property price;
- After the signing, your lawyer will help you register the property at the Land Registry Office in your name.
Important:
To ensure your house buying goes smoothly and to protect you every step of the way, it is a good idea to hire an independent lawyer and not one recommended by your real estate agent. A translator is also necessary if you don't speak Spanish.
Useful links:
Deloitte European Real Estate Index
Gov.UK Guidance on buying property in Spain
Real Estate Market and Prices in Spain 2023 Overview (globalpropertyguide.com)
