Despite the harsh factors, such as the pandemic in 2020, inflation, and war in Ukraine, the real estate market has not only moved from its place, but it behaves in a way that has not been seen since the "bubble". If the sale of apartments is already at an appropriate level that has not been observed since 2007, then prices reflect the same tendency.
According to the latest INE data, in Spain, apartment prices grew by 8.5% in the first quarter of 2022. This is the highest price increase since the second quarter of 2007. It was 15 years ago, when the "brick" was at the peak of the bubble. At that time, home prices rose by 11.6%.
But why are house prices rising? There are two main reasons: the lack of supply during a high demand period, and the escalation of construction costs.
When the price bubble burst in 2008, something happened: there was an oversupply, and when the requirements for borrowers became tighter, demand collapsed alongside prices.
The current situation is completely different, explains Maria Matos, Spokesperson and Director of Studies at Fotocasa: "We are facing a new buying boom, although now the situation is different. There is no more oversupply, but there is a stock shortage." "People have bought so many houses. They have broken the record since 2007 in such a short time that the market has become almost empty," adds Matos.
If demand is high and there is not enough supply to meet it, the price rope gets tighter and tighter. For the past 32 months in a row, housing prices have not stopped growing.
Now, with reduced lending, the problem is that a price bubble could inflate due to a lack of supply.
There is a second reason: rising commodity prices.
"The current west crisis has led to higher prices for building materials. It means that the new construction supply will slow down and it will take more time than usual to enter the market. These factors result in a big imbalance between supply and demand. This is the main problem causing prices to skyrocket and restricting access to homes." says Matos.
Evidence that the price problem lies in the supply shortage can be seen in new constructions.
Since 2014, the primary real estate market has been heating up faster than the secondary real estate market. Because the stocks left after the bubble burst have run out and new construction was quickly stopped, the supply of new housing has decreased and this has pushed prices up.