Economists of the European Central Bank (ECB) warn about the upcoming general fall in residential property prices in the eurozone markets. However, Spain is an exception in this case, since in its relation it is worth expecting a reverse trend.
And despite the obvious problems that this development creates for the Spanish economy in the current situation, so far this is still good news for those who plan to make money on investments in the residential sector in the coming year. However, it is important to establish why this supposed scenario, indicating an impressive price increase in Spain, has a great chance of happening.
First of all, the consumer is clearly affected by the increase in interest rates on lending in general and mortgage lending in particular. This is especially true in the case of individuals for whom a mortgage loan is one of the key instruments for financing the purchase of housing. And it is this factor, coupled with a general recession, inflation and cooling markets, that plays into the forecast of price declines within the eurozone.
However, the Spanish market is largely a market driven by investors, supported by wealthy foreign buyers and the tourism sector. Despite the fact that an increasing proportion of the Spanish population is losing access to the opportunity to buy new housing or enter the secondary market, their role in the overall picture is insignificant. Everything depends on the demand of the previously mentioned groups and it should largely remain at the same levels, if not increase.
Nevertheless, even with regard to the indigenous population of the country, not everything is so clear. Faced with high home purchase prices and extremely unattractive lending conditions, many Spaniards turned to the rental housing sector as an alternative.
This led to the rapid formation of an imbalance of supply and demand, followed by an active increase in rental rates. Thus, the Spaniards created with their own hands a situation in which previously unaffordable options for buying residential real estate turned out to be even acceptable when compared with the costs in the rental market.
The forecast of a general fall in prices in the eurozone carries a lot of nuances, the same amount of nuances can be found in relation to price growth in the Spanish market. From one Spanish region to another, the situation can change dramatically, not to mention the unique ratios of primary and secondary housing markets at the local level. So, there are forecasts of a fall in prices by 3-7% next year for secondary market housing, but it is unlikely that any hints of a decline in prices should be expected from the primary market.
You can write about the latter separately for a long time, but already now it is worth noting that the objects that have gone on sale or are in the active stage of construction have already been sold or reserved for sale. A buyer for them in 2023 is guaranteed. The situation is more complicated with the objects that will only be put into construction, including due to the lack of free land for construction in Spain, rising prices for energy and building materials, and rising labor costs. And all this even without mentioning the overvaluation of this market segment.