Different end of the year for real estate. The sector anticipates that the upward trend in housing sales that has been going on for months will slow down in a scenario of unstoppable inflation and rate hikes by the European Central Bank (ECB) and anticipates a rise in prices for the coming year of around 5%.
Until June, the real estate market reaped a streak of 16 consecutive months in which the number of home sales registered by the National Institute of Statistics (INE) was on the rise. Even after the Euribor returned to positive ground for the first time since 2016 in April, the trend seemed to continue.
“The first half of 2022 served to demonstrate the resilient nature of our real estate market: despite the difficult international situation and the rise in the price of variable-rate mortgages , operations on new homes drove a rebound in total sales in June,” he explains. Ferran Font, Director of Studies at piso.com.
Regarding the level of prices, the latest semi-annual report prepared by the real estate portal shows a slight upturn compared to the previous year and shows the upward correction that the prices of new construction are experiencing, which “have acted as a transmission belt towards the second hand”, he adds.
However, the historic shift in European monetary policy will put a brake on the trend. “With the rate hikes, the cost of mortgages will be higher and households with loans referenced to the Euribor (the majority in Spain) will begin to lose purchasing power,” explains the expert. Waiting for the data for August, the Euribor closed July on the verge of 1% and the average for this month, for now, is around 1.1%.
His forecast is that between now and the end of the year, trading operations will moderate and open a new stage “with reasonable upturns without losing dynamism,” Font concludes.
The Spanish Association of Real Estate Personal Shopper (Aepsi), which believes that real estate investment will remain in the main Spanish cities despite the rise in housing prices, has also spoken about this panorama.
It is one of the markets in which investors will continue to be “very present” since they opt to buy a home and rent it, with the aim of avoiding the loss of purchasing power due to inflation, they analyze from the association.
By province, the most popular areas are the coast and the main cities , with Barcelona being one of the places where historical records are being broken in terms of real estate investment. Specifically, some of the most popular neighborhoods in Barcelona are Pedralbes, Sarria-Sant Gervasi, Ensanche Derecho or Pueblo Nuevo.
The price of housing will increase by 5% in 2023
Inflation and the rise in interest rates could increase the price of housing by an average of 5%, according to forecasts by the Spanish Association of Real Estate Personal Shopper (Aepsi). The purchasing capacity, they point out, is going to be “very diminished”, and the reading of a foreseeable reduction in the number of operations in the second half of this year and that will continue in 2023 coincides.
However, for the vice president of Aepsi, Montse Moreno, this slowdown in the number of sales operations in the coming months “is far” from the levels of indebtedness of 2007 . According to her, the uncertainty in the market is “constant” and its evolution will depend on the monetary policies that are applied and the growth of the economy in the coming months.