If the pace of property sales and purchases, stimulated by the recovery of market activity after the most difficult months of the pandemic, remains at the current level, the available real estate stocks may not be enough to meet demand in the coming years. The Bank of Spain warns about this in its latest financial stability report and published it a few days ago. Although, it notes that there are no alarm signals or signs of housing revaluation yet, as there is a risk that prices will continue to rise due to an in the cost of labor and construction materials.
As a result, average house prices in the second quarter of this year increased by 3.3% year-on-year and reversed the slowdown trend recorded at the beginning of 2019. In particular, secondary real estate has risen in price by 2.9%, while new development projects have increased in price by about 6%. It may accelerate due to rising production costs.
Unlike what is happening in other neighboring countries, in Spain the situation in the real estate market does not cause concern. Although, there is a significant increase in new mortgage lending in 2021, there is no easing of the conditions for getting loans.
The Bank of Spain notes that home sales and purchases experienced a strong upswing in the first eight months of 2021. It is almost 14% compared to the same period in 2019. This progress contrasts with the more restrained dynamics of the supply of houses for sale. The growth in demand will be driven not only by the recovery of the economy and financial conditions, but also by investment decisions that were postponed with the onset of the pandemic, as well as changes in the preferences of families who now prefer apartments at home.
At the same time, the latest real estate market analysis published by Fotocasa portal demonstrates that Spain is close to a property bubble. So, if in February 2021 experts estimated this risk at 5.7 out of 10 points, then in September 2021 this indicator increased by 0.4 points.