REAL ESTATE – MARBELLA WOHNEN – Home sales in Spain moderate in 2023 and will reactivate in 2024
Home sales in Spain moderate in 2023 and will reactivate in 2024
The increase in interest rates is having a notable effect on the real estate market in Spain. The number of homes – especially used ones – and the number of mortgages have been falling since the second half of last year, and the price, although it continues to grow, is doing so at lower rates. On the other hand, it is also indicated that the sector could begin to reactivate in 2024 with moderate increases in demand, supply and prices, in a context of economic recovery and relatively low residential supply. In fact, housing prices are expected to grow by around 2.5% next year, sales by around 5% and visas by around 6%.
Economic growth will moderate in 2023 (1.6%), but recession has been avoided and activity would have accelerated in the first quarter of this year. This progress has been possible thanks to the ability of the European economy to avoid scenarios of restrictions in the use of energy and the reduction in the cost of generating it. A strength of activity that has kept inflation at relatively high levels, which has led to a higher interest rate increase than expected a few months ago. For its part, growth in 2024 could increase by 2.6%.
All of the above has had an effect on the real estate sector in Spain, reducing the purchase of homes and mortgages. Later on, transactions are expected to decrease from the 720,000 carried out in 2022 to a level slightly above 500,000 homes in 2023 and 2024, similar to that registered on average in the 2016-2019 period. An adjustment that, to a greater extent, will come from the side of used housing and that is explained by the lower economic growth, both national and foreign, the rise in interest rates and the reduction in savings accumulated during the pandemic.
For its part, the signing of new housing visas could be reduced to around 100,000 units. Among the factors that will limit the advance of the offer are the increase in the cost of financing, the increase in wages, the lack of qualified labor, the high price of some inputs, the deterioration in demand expectations, as well as regulatory uncertainty. In any case, the shortage of new housing should make the impact limited.
House prices will remain practically constant in 2023 (-0.2%), although in real terms the correction would be 3.9%. The reduction in sales could negatively impact the price of housing. Even so, high inflation and the relative scarcity of supply will partly offset this negative impact.
Conclusion the sector could begin to show a new recovery in 2024 with moderate increases in demand, supply and prices, in a context of economic recovery and relatively low residential supply. In this sense, housing prices are expected to grow around 2.5%, sales around 5% and visas around 6%. All this as long as the main risks that threaten the sector do not trigger, such as: additional monetary tightening as a result of high inflation, the shortage of qualified labor and developable land, or the increase in uncertainty surrounding economics and politics.
Along with considering all these factors, professional advice from a trusted expert is essential as they can advise when buying a home according to the particular economic situation and answer any questions that may arise throughout the process.
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