Since 2007, the Spanish real estate market has not had such a record year as in 2022. More than 650,000 residential properties were sold last year. However, the last month of the year showed one curious trend. Firstly, the "boom" in demand is most likely coming to an end and, secondly, primary housing may fade into the background, giving way to the secondary market.
According to experts from Fotocasa, 15% fewer residential properties will be sold in 2023 due to rising prices, higher interest rates, tighter conditions for mortgage loans and a decrease in income and savings of Spanish households.
Their assumptions are based on the fact that during December, home sales immediately fell by 21.3%, if you rely on data from the National Institute of Statistics of Spain (INE). Despite the fact that the market picked up growth again in January-February 2023, such a sharp monthly decline cannot simply be ignored. The current economic situation is gradually taking away the strength of the market, which leads to such unexpected and abrupt "failures".
Maria Matos, director of research at Fotocasa, explained: "There was a significant slowdown [in home sales] in December. At the same time, these transactions were concluded back in September and October last year, since it usually takes from 60 to 90 days to complete the transaction".
In 2021, the situation was the opposite. Then, by the end of the year, 530,000 transactions on secondary real estate were registered, which was an increase of 18% compared to 2020. New real estate reported 115,000 closed transactions and an annual growth of 2%. December 2021 was then another month of growth in the long process of market recovery. Last December was a month of sharp decline and its results are a delayed effect of earlier market activity.
In 2023, many experts expect an even greater decline in the market, especially in the second half of the year. Although the fall will not be sharp. It's more about a planned slowdown, supported by a decrease in the customer base. At the same time, most of the buyers are moving to the secondary market due to the shortage of new construction and exceptionally high prices for such an offer. Nevertheless, so far, the market is still trying to grow, the first months show new levels of prices and sales and this may create a false picture of a "clear horizon" for the market.
After 10 consecutive quarters of growth, the end of 2022 was the first case of a fall. By region, a particularly large decrease can be noted in Extremadura (-9.9%), La Rioja (-6.7%) and the Canary Islands (-5.6%). Only five destinations grew at the end of the year: the Balearic Islands (5.7%), Murcia (4.5%), Andalusia (1.4%), Baskonia (1.4%) and Aragon (1.2%).
It is worth noting that the correction of housing prices is not considered by experts as something negative. A healthy correction is always needed to maintain the stable functioning of the sector. A negative fall is only when all safe correction windows have already been passed and only a sharp collapse is ahead. Since the pessimistic forecast for the beginning of the year did not come true, it is likely that Spanish real estate will have a smoother entry into the phase of moderate, stable development.