Although Spain has long needed a total renewal of its own housing stock, the market of new buildings is still far from the indicators of sufficient production of new real estate. The big factors are: missing raw materials, inflation, rising prices for labor and building materials. The market of new buildings is scarce and plays a big role, and will continue to play, the secondary market.
In general, this has a negative impact on the market, but it is also a problem for the authorities. Old housing is much less energy efficient and environmentally friendly. The market itself is in the process of deep transformation and its future is uncertain, especially in the current difficult circumstances.
Francisco Sierra, managing director of Casavo in Spain and Portugal, notes on this occasion that uncertainty in the global economy has already led to a reduction in the stock of affordable housing in the housing stock of Spain and in cities such as Madrid and Barcelona, the supply has fallen by about 39%. Sierra adds that interest in the market of new buildings is extremely high, but prices are unaffordable for a large number of potential buyers.
In turn, Pablo Balea, director of the department for work with the primary housing market at aProperties, notes: «Currently, there is a certain decrease in the volume of transactions for the sale of housing to end consumers at the national level. This is largely due to the excessive increase in prices for scarce goods and the high cost of mortgage loans for ordinary buyers. Nevertheless, this is not enough to drastically reduce demand and eliminate the lack of housing supply on the market».
Balea adds that in fact, in recent months, the number of transactions with foreign buyers has increased. Most of them are chasing a golden resident visa to stay in the country, but the other part is investors who perceive the Spanish residential real estate market as a safe haven against the background of inflation and the crisis in the global economy. At the same time, this shelter can also provide a good profit.
The representative of aProperties notes, however, that with all the described macroeconomic context, the demand for new housing in the first half of 2022 was stable, and customers were solvent. In general, housing prices in key cities of the country have been actively growing in recent years precisely because there is a shortage and sufficient demand from wealthy buyers and investors.
In view of this, the Spanish market and the policy regarding this market requires a radical revision and adaptation. Unfortunately, Balea admits that he does not see any ways to eliminate problems and deficits in the short and medium term. Long-term planning and global plans are required.
Will prices continue to rise?
According to data published by the Institute of Statistics of Spain (INE), in annual terms, the increase in prices for residential real estate is already 8%. Prices will continue to rise until the end of the year, including due to inflation. At the same time, Casavo indicate that already in 2023 the trend may change and we should expect a cooling of the market. aProperties believe that by the end of 2023, the price growth in annual terms will be only 4%.