Year 2023 was an exerciseimpasse‘In the housing market. In 2021 and 2022, especially in the first half of the second, there is a real ‘Boom’, in the housing market, The record sales figures and rise in prices are comparable only to the final blows of the bubble. However, throughout 2023 and forecasts show that the market will enter a slowdown phase in terms of both transactions and price increases in 2024 as well.
649,494 sales closed in 2022; This figure is 15% more than in 2021 and a record number not seen since before the financial crisis. Unless there are definitive data for 2023, which the National Statistics Institute announced with a two-month delay, the year will end with declines. “The number of transactions will continue to decrease in the coming months” We closed the year with approximately 550,000 sales and purchases” he states Judit MontoriolChief economist at CaixaBank Research. German Perez BarrioThe head of appraiser UVE Valaciones also believes that “the year will close with just under 600,000 sales and purchases.” According to these figures Paloma ArnaizIt represents “a gradual return to Spain’s historical average, with volumes similar to those experienced in 2018 and 2019,” said the secretary general of the Spanish Value Association (AEV).
Despite the decline in transactions and the slowdown in the market, the macroeconomic situation was not reflected in housing prices. 2023 will be the year of increases, as in previous years. “Housing prices increased by nearly 5 percent“, To explain Cristina AriasThe director of research service Tinsa warns that this figure “represents a slowdown compared to the 7% increase recorded in 2022.” UVE Valuations indicate that revaluation will range between 0% and 2% in 2023, with data from the College of Registrars. However, three data sources (Ministry of Housing, Registrars and real estate portals) show that increases in prices are falling further. From Fotocasa, Maria MatosThe portal spokesperson adds: “If we average all interannual changes for 2023, excluding December, we get an increase of 8.8%. If we highlight November data for now, we detect an interannual growth in price.” The rate of second-hand houses is 6.2%.
María Matos makes her prediction for next year: “We predict Increasing in the first quarter of the year and from there we’ll probably see downward fluctuations in some communities Decrease in demand and decrease in tourist attractiveness due to interannual comparison of high changes presented in 2023.” In practice, these decreases will not be very large price decreases. “After abnormal increases of up to 10.8% in June 2023, the Price will simply return to the starting point ” explains the Fotocasa spokesperson.
In the same vein, CaixaBank Research also points out that the effect of interest rate increases is slowly reflected in the real economy. “Rates are currently at their highest level in 15 years, and their impact is reflected in house prices with some delay,” says Montoriol. Economic analysis house of financial institution, 1.4% slowdown in 2024The Appraisal Value of free houses is monitored by the Ministry of Housing.
UVE Valuations take into account the most negative forecasts and Drops up to 3%. “We expect moderate declines across Spain as a whole, but with a big difference depending on the region: prices may fall in tourist areas and the decline may be greater in large cities,” says Germán Pérez Barrio.
No expert consulted expects major declines in pricesat least in a nominal sense. There are real unknowns, including inflation. “This will depend on the development of inflation, which is currently subject to uncertainty due to its dependence on the development of energy prices in the context of the international war in Ukraine and Gaza,” explains the director of Tinsa’s research service. “The nominal progress we expect for 2024 is 1.4 percent, a figure below inflation, which will be above 3 percent. landing housing prices literally“Adds Montoriol. Paloma Arnaiz believes that new construction housing “could experience small growth in real terms.”
Will more or fewer homes be sold in 2024?
HE The number of sales will continue to declineIn 2024, as a result of the cooling in demand caused by the interest rate increase. Higher financing costs suddenly limit households’ leverage. CaixaBank Research points out that it will approximately “approach pre-pandemic records” 510,000 transactions. Fotocasa reduces this figure 420,000 transactionsAlthough it leaves the door open to a hypothetical rate cut, which would allow closing at higher figures; The most positive predictions of UVE Valuations for the next year are 540,000 sales“numbers are similar to 2019.”
tinsa He does not expect a major decrease in operations either.. “This evolution is supported by the elasticity of employment and the revival of household purchasing power with the decline of inflation in an environment of high rates,” explains Cristina Arias.
The housing market is a market that is resilient and has a great capacity to adapt to the new macroeconomic situation, as revealed in the pandemic. Currently the price is trending moderately after posting the highest interannual variation of all time, and we may begin to see a moderation in demand in local areas, although the most stressed communities continue with very significant increases.
In general terms, we are returning to pre-pandemic annual transaction figures, after a period of decreased transactions due to the quarantine, followed by a large increase to compensate for transactions that could not be completed due to the pandemic. However, since the impact of interest rate increases is greater in regions where financed purchases are higher, significant differences emerge depending on the region.
Considering that the rate hike cycle is very fast and pronounced, the Spanish market is slowing down but at a slower pace than expected. This is due to a variety of factors, including a resilient labor market, significant migration flows, a mismatch between low new housing supply and high demand, and positive household finances. The high percentage of fixed-rate mortgages issued in recent years limits the impact of increases in interest rates.
We find ourselves in a scenario of solvent demand and mainly usage, balanced debt ratios, default risk limited to the fixed rate of mortgages, reduction of debts of households and the absence of enthusiasm in construction that could lead to corresponding corrections in house prices.
Housing is a very fast market. On the one hand, a few residential areas where most of the demand and population are concentrated maintain upward price dynamics, especially in the new construction and rental segments. On the other hand, a large part of Spain’s territory is occupied by towns where real estate dynamics are low and prices remain stable. On the whole, the national average has grown relatively smoothly compared to the sudden change that has occurred in other countries.