Inflation, rising interest rates, the threat of recession, the armed conflict in Ukraine affect the global economy, but it seems that many real estate markets are avoiding this influence, for example, Spain, where housing prices and rental rates are breaking growth records.
Fotocasa notes that, for example, in Madrid, the capital of Spain, residential real estate prices rose only in January by 9% year-on-year. Rental rates have increased by 8%, and Madrid is not the most expensive of the country's cities.
On average, housing prices grew by 7.5% in the country in 2022. The trend is expected to continue in 2023, as confirmed by the January data. International demand for residential real estate remains high and is dynamically growing, despite the increase in interest rates regularly implemented by the European Central Bank (ECB).
Contrary to interest rate expectations, Fotocasa notes that there is a buyer on the market with a "sufficiently solvent profile" who continues to consider Spanish real estate an attractive asset to buy. Customers who take out mortgages prefer loans with a fixed rate of 3% or 4%. Although many people are waiting for the uncertainty in the economy to disappear.
The demand has increased the price per square meter from 1,907 euros in 2021 to 2,046 euros at the end of 2022. This is an increase of 7.5%, which is the largest figure in 17 years as of December. Over the past year, rental rates have also increased — from 10.27 to 11.03 euros per square meter.
Both in the short and medium term, Fotocasa excludes a fall or slowdown in the growth of housing prices in the secondary market and ensures that the demand-supply gap will continue to grow pushing prices up in the first half of the year. However, the prices of secondary market real estate will begin to decline in the second half of the year due to the tightening of credit policy in the real estate sector and the impact of inflation.
Madrid sets the trend in the national market
Rental rates and home prices in Madrid also rose in January and will rise in the coming months underscoring the overall trend in the market. Back in November, housing prices in the capital increased by 9.4% year-on-year. Although they decreased slightly in December (by 8.3%), the portal's forecast indicates growth.
According to Fotocasa representatives, Madrid "sets the trend in the national market and determines the direction of market transformation." Nevertheless, the portal's experts note that Barcelona is a litmus test for the Spanish market, so it is also necessary to pay close attention to its indicators.
In late 2022, there were high prices in Madrid’s districts, except for Ucero, Barajas and Villaverde. There will be the same situation this year.