According to the National Institute of Statistics of Spain (INE), in the first half of 2022, the average cost of opening a mortgage loan in annual terms grew by 23%. Nevertheless, residential property sales continued to grow by 18.8%.
Against the backdrop of an ever-growing market, more and more people are wondering whether a new "bubble" threatens the real estate market in Spain? Almost half of the Spanish polled by Fotocasa Research reported fears about the future of the Spanish market. In the report "An inside look at the real estate market in 2021-2022" Fotocasa points out that 46% of Spaniards are sure that the country's real estate market is entering a new bubble. The young respondents aged 25 to 34 who live in such large cities as Madrid and Barcelona are most afraid.
Maria Matos, Director of Research and spokeswoman for Fotocasa explains: "The market continues to heat up because the demand for buying real estate remains high, and real estate stocks are small. This year supported the successes of 2021, which were distinguished by the "frenzied" activity of the market, and multiplied them. Spain has been breaking and continues to break records for real estate sales and price growth. 2021 was also the best year for the mortgage market in the last decade. However, in 2007, the figures are far from extreme, so it is difficult to say that we are close to a bubble. According to the Fotocasa real estate index, we are still 34% below the peak prices reached during the boom of the 00s."
Despite the rising negative attitude among the general consumer, home sales continue to grow, as previously reported. As of June 2022, an annual sales growth of 18.8% provided the market with more than 58,000 successfully closed deals. In total, the number of real estate transactions in the first half of this year increased by 23.1%. These indicators account for 23% of the increase in the cost of mortgage loans. It is worth paying attention to the NDER interest rate, equivalent to APR, but without commission costs. This rate increased in the first half of the year to 1.7%. This is after a record low of 1.3% in 2021, supported by high competition between financial institutions and negative rates in the eurozone.
However, central banks have put an end to the period of cheap loans and easy ways to get them. High inflation requires lower demand, including more expensive credit instruments. According to the "Bank Lending Sector Survey" of the European Central Bank (ECB), 30% of Spanish financial institutions tightened the terms of mortgage loans in the second quarter of 2022. Moreover, this growth is expected to continue at least until the end of this year.