The Swedish Economy Brightens – What It Means for the Spanish Real Estate Market

Following the latest interest rate cut, the Swedish economy is beginning to recover, offering a brighter future for many households. In the wake of the Swedish central bank's decision, major banks have lowered their variable interest rates, which directly affects the wallets of Swedes with variable-rate mortgages. This phenomenon is not unique to Sweden; a similar trend is observed in both the U.S. and the EU, where the European Central Bank (ECB) is following the same path.

What happens when interest rates fall? Traditionally, lower rates lead to rising property prices, a pattern seen both in Sweden and internationally. We predict a recovery in the Swedish housing market, which will, in the long term, lead more Swedes to return to the Spanish market, especially after several quarters of declining interest.

Marbella, which has already undergone significant changes in recent years, is an example of a market attracting both investors and new buyers. Prices have risen significantly, and a wave of renovations has increased the supply of luxury refurbished properties. However, the number of properties for sale is now at record low levels. A key factor behind this is that many property owners in Spain have fixed-rate loans with favorable terms, making it expensive to move, thus creating a "lock-in effect" on the market.

The Spanish property market, particularly in luxury destinations like Marbella, has also seen a boom in the restaurant industry, strengthening the city's position as an "ultra-luxury" destination in Europe. This has attracted international buyers, and according to Panorama's 2023 report, Swedes ranked second with 10.78% of purchases, just behind the British. However, it is important to note that these figures are based on internal sales data and may present a somewhat skewed picture. According to official statistics for all of Spain, Swedes accounted for 0.33% of total property purchases during the year.

So, what can we expect moving forward? Here are some trends that may influence the market:

1. Interest rates will likely continue to fall, both in Sweden and internationally.
2. Swedish property purchases on the Costa del Sol, which have been weak in recent quarters, are expected to increase again.
3. Prices will continue to rise, especially in attractive areas like Marbella.
4. The price increases first seen around Marbella may spread to other areas on the Costa del Sol, where there is significant potential for faster price growth.

In summary, Marbella is poised for continued strong market development, with international buyers playing a crucial role in shaping its future.