Housing sales and mortgage approvals in Spain dipped in the last year
The year-over-year figures show a 9.7 percent drop in home transactions and a 17.8 percent fall in mortgage lending. In 2023, a total of 586,913 residential properties were sold, while financial institutions granted 381,560 loans, according to the annual report released by the National Institute of Statistics. This marks the first yearly decrease since 2020, the pandemic year that triggered an unprecedented surge in Spain’s property market.
Despite the annual decline, the market remained dynamic. In 2023, the number of home purchases reached the third-best level in the historical series, surpassed only by 2007 and 2022. Mortgages granted were among the seven highest on record since 2007. Over the last twelve months, home sales stood about 25 percent above the 2007- baseline average, while mortgage issuance was roughly 14.35 percent below that average, a figure that accounts for the years 2007 through 2010, when lending exceeded 600,000 per year, and even surpassed a million loans in 2007.
The share of new-build versus existing-home sales remained relatively stable: 110,894 units were newly built and 476,019 were pre-owned. The downturn was concentrated in the second-hand segment, which fell by 10.8 percent in 2023, while new homes declined by only 4.8 percent. As usual, most purchases were on the free-home regime, representing 92.4 percent, with 7.6 percent under protected schemes.
In the mortgage arena, the total borrowed in the past year reached 54.209 billion euros, down 19.4 percent from 2022. The average loan size was 142,074 euros, roughly in line with the previous year, only about 2 percent lower. Looking at December data, the average interest rate on these mortgages stood at 3.32 percent with an average term of 24 years. Breaking down by loan type, 45.8 percent of home mortgages were variable-rate and averaged 3.07 percent, while 54.2 percent were fixed-rate at an average of 3.54 percent.
Beatriz Toribio, secretary general of the Association of Promoters and Builders of Spain (APCE), notes that the housing market has endured the sharp financing rebound far better than expected. Francisco Iñareta, spokesperson for the property portal Idealista, adds that 2023 was not catastrophic; while closed deals fell to pre-2008 levels, it remains the second-best year since that crisis. Mortgage activity did decline more due to higher financing costs, but the drop did not prevent a price rise, which increased by 8.1 percent in 2023.
“The sector shows remarkable resilience as the transformation proceeds smoothly, adjusting to the new interest rate environment,” explains Maria Matos, spokesperson for Fotocasa. “In 2023, the market averaged about 48,000 home purchases and 31,000 mortgages per month, indicating stronger activity than anticipated. Demand remains above pre-pandemic levels, so rate hikes are affecting only the surplus demand rather than freezing it.”
What is expected for 2024?
Idealista’s spokesman suggests that, based on INE’s year-end 2023 data, the housing market could move from a softer start to a steadier improvement through the year. The European Central Bank has signaled a potential modest rate cut mid-year, which would once again reduce mortgage costs and likely attract buyers back into the market. Many families had paused activity awaiting lower prices; if credit becomes cheaper and prices do not fall further, some may re-enter the market. Nevertheless, a significant new housing stock influx is unlikely, and the volume of closed transactions is not expected to surge in the coming months. Still, a modest rise in demand could put upward pressure on prices, potentially accelerating gains, Iñareta notes.
Beatriz Toribio also highlights the ECB’s decisions, even as rate cuts are expected to continue in the coming months. APCE’s 2024 forecast suggests that official housing data will show a clearer slowdown, reflecting lag effects. Financing costs, inflation pressures, and higher property prices should increasingly influence purchase intent, though a possible rate cut by the ECB in the second half of the year might revive activity.
Fotocasa’s outlook aligns with a two-stage year: a pre-rate-cut era and a post-cut era. They also anticipate a mortgage price war among banks. “Mortgage volume is likely to stay steady thanks to Euribor dynamics, though year-on-year comparisons will show declines,” Matos concludes. “Lenders could reintroduce fixed-rate offerings to attract buyers while overall transaction momentum may ease more in the housing market, given investor activity remains substantial.”
Overall, the industry continues to navigate a shifting landscape, balancing higher financing costs with robust demand in certain segments. Market observers emphasize that the resilience shown in 2023 could set the tone for 2024, with careful attention to policy moves and macroeconomic signals shaping who buys and when.