REAL ESTATE – MARBELLA – MARBELLA WOHNEN – The reason why the price of housing will fall

The reason why the price of housing will fall, according to the ECB

Christine Lagarde, President of the European Central Bank

The Euribor returned to positive territory at the beginning of 2022, after six consecutive years in negative figures. In addition, the worst news was confirmed with an upward trend that is still ongoing and that mainly affects people who took out a variable-rate mortgage loan.

To counteract inflation, the European Central Bank (ECB) announced a rate hike of 75 basis points, thus becoming the largest rise in the history of the euro. In this way, the European organization opted for the rise in the price of money by three quarters of a point, up to 1.25%, to tackle the average inflation in the euro zone, now at 9.1%. For the next few years, the agency’s forecasts pointed to an inflation of 5.5% in 2023 and 2.3% in 2024.

From the body chaired by Christine Lagarde, on the other hand, they have explained that the price of housing will fall. A decrease that could be 9% in two years, for each point that mortgage rates rise. In an article published on its official website, reputed economists such as Niccolò Battistini or Johannes Gareis mentioned that, in the first quarter of the year, there was a rise in mortgage interest rates of 63 basis points.

 

According to the linear projection drawn up by technical experts from the ECB, the drop could be 5% for homes and 8% for real estate investment, if there is an increase of one percentage point in the price of the three types of mortgage (fixed , variable and mixed). A decrease that would be 9% and 15%, respectively, if a non-linear projection continues to take into account greater price sensitivity due to the low interest rate environment.

Changes in the trend in the real estate market after the pandemic

The reason why the drop projected by the ECB could be explained lies in the changes in trend produced in the real estate market after the pandemic. The same report published by the agency detailed that European citizens are now opting for more spacious properties, where it is possible to work from home. Hence, the price of single-family homes increased in countries such as Spain, France, Belgium, the Netherlands and Luxembourg.

Pandemic-induced shifts in housing preferences could offset higher mortgage rates, and could explain some of the resilience that has been seen in the euro area property market.

In any case, when making the decision to invest in housing, the professional advice of an expert is key, such as the real estate professional, who guides the buyer and resolves all the doubts that may arise throughout the process. Do you want an expert to advise you without any commitment? Let yourself be advised by a specialist.

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