In June, for the first time since 2019, house prices in London fell compared to the same month in 2022. This is not an isolated phenomenon in the European Union: United Kingdomflats were damaged Worst depreciation since 2009; housing prices in the second quarter Germany It recorded the biggest annual decline since 2000.
The housing market is going through a turbulent period on a European level, but not in Spain, at least in terms of prices. The number of mortgages sold and contracted fell slightly in 2023 compared to 2022: 5% fewer homes were sold and 14% fewer mortgage loans were signed through July. Although these indicators confirm the slowdown in the market, HE housing prices The increase has not stopped in the last 37 quarters, 3.6% in the last quarter.
Cristina AriasTinsa Studies Director points out the main reason for this: “There has been a continuous increase in housing prices in some European cities since 2008, and this increase has been accelerating since 2019. The change in monetary policy has revealed bubble dynamics and prices in these markets is being set. In the same line, Carlos de AlmeidaThe commercial director of New Construction at consultancy CBRE notes that “prices in other European capitals rose a lot after the great financial crisis and it is normal for them to correct further now.” José María BasáñezThe head of valuer Tecnitasa adds: “House prices in many European countries are correcting downwards, especially in those countries where they have risen the most in recent years and are at a much steeper level than in Spain. Germany and the UK are among the leading prices in Europe, according to various analysts. “The two European countries where prices are predicted to see the biggest declines, falling by as much as 12% between 2023 and 2024.”
According to all spokespeople interviewed, the situation in Spain is exactly the opposite of that in other countries. According to the Tinsa board of directors, there is no bubble here, on the contrary: “In Madrid and Barcelona, The upward trend in price then started and growth rates haven’t been this aggressive for that long. “In addition, mortgage financing remained at balanced levels, and there was no excessive risk concentration or excessive loan demand.”
The main reason is lack of supply
The main reason why Spain’s new construction market did not experience a bubble like the first decade of the 21st century is that, on the contrary, there was no oversupply. During the worst years of the bubble, everything was built everywhere; This is something that has not happened in recent years. Carlos de Almeida illustrates this: “Housing supply is not sufficient to meet the levels of new housing creation in Spain. Therefore, The number of houses completed in 2021 and 2022 was 182 thousand unitsa number well below the 370,000 new homes created in the same two years”.
The head of Tecnitasa believes that demand for housing remains strong in line with existing supply: “Despite the significant increase in interest rates and the tightening of conditions for granting mortgages by financial institutions, demand remains strong due to several factors, including: A significant percentage of foreign buyers in certain markets there is and now Almost half of home sales in Spain are made in cash that is, without mortgage financing.”
Francisco InaretaA spokesman for the property portal Idealista does not believe that the increase in interest rates also affects prices: “In August, house prices for sale increased by 3.1% annually in Madrid and 1.7% in Barcelona. The figures are from those registered in Portugal (Lisbon 6% .6 and Porto 10%) are more moderate and very similar to those in Italy (Milan 2.3% and Rome -0.3%). Lack of available supply after a buying boom “We are at the end of the epidemic, which has caused 2022 to be a record year in real estate, and in a period when demand is still strong.”
The CBRE spokesperson also emphasizes the importance of the foreign buyer: “Foreign demand for housing continues to grow and is already represents 15% of the total transaction (United Kingdom, Germany and France are next) reached their highest record by fully recovering from Covid. Explanations for the recovery in demand are the low housing prices compared to the European environment, the effects of remote working, climate, culture, services, etc. is to increase.
Additionally, according to the Idealista spokesperson, the potential home buyer’s financial situation is quite stable. “Official Spanish data shows that Half of the closed transactions are signed without mortgage The data we use at Idealista tells us that about half of families looking to buy a house already own another house, which greatly reduces the costs of the operation and makes them practically immune to the increase in Euribor. While it is true that a very significant part of the demand is exported from the market, the part that can still reach it is enough to support prices. The emergence of new homes for sale is not a lever that can be activated quickly, so it is possible that the current lack of supply will continue to be the main obstacle to the buying and selling market, which may continue with slight increases or trend towards stability. in many markets,” he notes.
What will happen to house prices in the coming months?
Tecnitasa’s senior manager predicts new price increases in the coming months: ” new construction houseSince the current supply level is much lower than the current strong demand, we predict: average prices continue to rise The coming months to a greater or lesser extent depend on other parameters such as political stability, the development of the economy and employment. Regarding this second-hand houses will undoubtedly go by region. The average price is expected to remain the same in some regions, the average price is expected to decrease slightly in the form of a soft landing in regions where demand decreases, and the average second-hand housing prices are expected to increase in regions where demand is strong. It will continue to rise.”
For his part, the Director of Tinsa Research believes: “For the remainder of 2023, HE housing price will continue to trend towards stabilityInterannual variations are approaching 0%. “In 2024, this trend will continue with the risk of moderate downward adjustments. Downside risks arise from the impact of the increase in interest rates on economic growth and mortgage issuance, which is combined with the positive impact of restoring household purchasing power with the normalization of inflation, at least “It will be partially balanced,” he added.