HE loop change Approved in the Spanish real estate market. What official statistics still don’t say are the challenges real estate companies are currently considering closing. new tradesin a market marked with rise interest ratesThe decrease in the current supply of both newly built and second-hand homes and growing doubts about the future development of prices. There is already a perceived consensus among experts. turning point In the complex relationship between real estate supply and demand, however, the effect in each market can vary so much that even the most scientific averages cannot point to practically validated data for every buyer or seller. With fewer leases to manage and fewer sales, aside from ‘high-reputation’ homes whose clients do not need mortgages, there is growing concern among street-level professionals about the possibility of a new crisis.
The implications of this panorama are that average prices either stabilize or fall, but are more or less dependent on nearby supply. But even the prices posted on some portals continued to rise in March, as transactions signed in the presence of a notary were largely agreed last year, with predetermined mortgage rates. However, the price adjustment is already noticeable in Europe. HE price living place in the eurozone In the fourth quarter of 2022, it decreased by 1.7% compared to the previous quarter. It’s the biggest drop since the last quarter of 2008, according to data published by the community statistics office Eurostat.
Possible closure of 20% of the real estate
The current offer is the one that determines not only the increase in mortgage costs, but the development of prices in Spain. Pisos.com research director Ferran Font agrees that in Barcelona, prices rise in neighborhoods with the highest disposable income, while prices fall where potential buyers are more sensitive to a rise in the price of money.
at street level The efforts of professionals to make sales multiply. (some sources point to a 20% probability of closure of real estate companies if the situation continues), statistics are already starting to reflect the change in the market situation in Spain. The valuation firm Tinsa has already found that the average price growth rate fell for the first time since June 2021, at -4.1% per year in March compared to +4.6% year-on-year recorded in December 2022. The average price per square meter in Tinsa in March reached 1,801 euros (2,845 euros in Madrid, 2,838 euros in Barcelona).
Fotocasa’s data shows that the average price of homes posted on its portal increased by an average of 2.5% (5.2% year-on-year) in Catalonia in the first quarter, but not so much in cities like Mont-Roig del Camp. Capellades increased by more than 10%. Maybe it’s the foreign buyer’s influence or the lack of local supply. At a time when even stratospheric rent seems like the better option, it seems like the last gasp of a market that already requires moderate prices to meet conservative demand. “Given the rate of increase in mortgage prices caused by Euribor, it’s only a matter of time before the price starts to show signs of moderation and returns to a stable path,” said María Matos, Fotocasa’s director of research.
Lack of supply and increase in rates
Guifré Homedes, CEO of Amat real estate, believes this The current situation is a “market blockade” due to lack of supply and limited demand. due to the increase in rates. And prices fell less than expected. According to that, ” increase in interest ratesThe rise in mortgage prices and inflation have affected demand, but at the same time the main problem of real estate companies is pulling supply.” The current bid is the lowest in the last five years, says Homedes, who accepts this in the case of rental housing, in his case fell almost 50% and as a company, they are looking for formulas to redirect the activity of the personnel associated with this activity. Used home sales and foreign demand (in its case, 43% of sales in Barcelona) are one of the keys to keeping positive accounts.
The effect of rising mortgage prices is not homogeneous At a time when interest rates are skyrocketing. Regarding the impact on families, factors such as the age of the loan, remaining debt, reference interest rate or household income should be considered. Too many variables for cold socks. However, if the average outstanding balance per family in Spain is about 82,700 euros, each increment in Euribor makes the monthly payment about 43 euros more expensive for a 25-year mortgage. For mortgages that have been recently subscribed and are starting to depreciate, the cost of increasing Euribor will increase to an average of 73 euros per month for each point. The impact of the increase in rates will be greater for variable mortgages with maturities less than five years. Regarding income level, the number of families particularly affected by the increase in Euribor rises to 260,000 (more than 40% of income allocated to paying for housing).
Pero They are the first banks to pay for the peace theory in terms of residential buying and selling activity in Spain.. CaixaBank and ING bank are already repeating this in their work. Second, in its latest report on real estate prospects for 2023, it points to “a year of slowdown in the Spanish property market due to stagnation and a possible fall in house prices in the first half of the year, due to the sharp rise in interest rates and tightening of credit conditions”. However, they do not foresee a ‘slump’ because “according to the latest ECB bank loan survey, loan demand has fallen less in Spain because Spanish households trust the property market more than in other eurozone countries”.