Uncertainty and the energy crisis will definitely have an impact on the Spanish housing market in 2022. At least according to the current forecast of the Spanish commercial bank Bankinter.
A new strategy report prepared by the bank's research department predicts modest increases in residential property prices, falling sales and worsening financing conditions in the coming months.
Bankinter explains that after rising by 3.7% in 2021 and to 6.4% in the last quarter of last year, the housing prices should slow down to 2% this year and 1% next year. This means they will grow at a slower pace than inflation, which, according to the bank, will be 4.1% in 2022 and 2% in 2023.
The report also points out two special reasons that will weaken the upward trend observed in recent months and expected months in 2022.
The first reason is the decrease in household saving rates, which broke records during the pandemic, as well as strong inflation in basic consumer goods such as energy and food.
The second reason: a slight increase in amount of financing. In this case, the main driver is the growth of the 12-month Euribor (approx. The Euro Interbank Offered Rate) is the main indicator for shift in mortgage lending rates in Spain.
The European Central Bank (ECB) is likely to raise interest rates soon to curb inflation.
In this scenario, the Euribor rate could reach around 0.4% this year and 0.8% in 2023, according to Bankinter. These figures are aligned with the forecasts of the Caixabank research department.
Real property market deceleration despite the strong fundamentals
Bankinter's report indicates that in addition to the price deceleration in the sector, a slight decrease will show up in the number of residential real property sales.
“In 2022, activity in the real property market should decrease to some extent. We are moving away from the past 15-year highs with 565,000 homes sold in 2021,” the report says.
The bank’s specialists expect that the sales figure will gradually reduce by -5% per year, and will stabilize at around 500,000 transactions from 2023. The report highlights that about 400,000 of them will fall on the secondary market, and the remaining 100,000 will be new-builts. In addition it is said that these are "reasonable levels in the long run".