According to the National Institute of Statistics of Spain (INE), from January to November 2022, sales of residential real estate in Spain reached 606,124 transactions. This achievement not only exceeds the result of 2021, but also practically sets a historical record for the local market. The only year that was able to record an even greater result is 2007.
It was a peak year for the market as a whole, which turned out to be in the very center of the real estate bubble of the second half of the 00s. We are talking about 800,000 transactions — a result that is unlikely in the coming years, if ever, we will see from the Spanish market. Last year was able to fully «ride» the wave of recovery that began after the end of the acute phase of COVID-19 in 2020-21. Excluding the Easter period, each month of 2022 recorded more than 50,000 residential real estate transactions.
But despite the incredible dynamics of the market last year, this year will be marked by its noticeable slowdown. As one of the signs of a slowdown, data for November 2022 can be cited. Despite the fact that 55,132 transactions for the purchase of housing were recorded on the market in November, which is an increase of 10.8% by November 2021, when comparing these results with the beginning of 2022, we will get a 30% reduction in volumes.
Such dynamics, in general, allows us to divide the past year into two periods. The first one was a triumph for the market, from the beginning of the year to the end of the summer, the indicators grew in all directions and market segments. However, since September, quite sharply, there has been a reversal in the movement and the market turnover began to decline rapidly. This became especially noticeable after the actions of the European Central Bank (ECB) related to the increase in the key rate and the increase in the value of money began to affect the market in real terms.
Spanish real estate itself is an extremely expensive acquisition today, which is not affordable for a huge number of people inside Spain, which certainly reduces consumer demand. However, if we add to this extremely expensive credit loans with tightened conditions, then housing affordability drops to minimum values altogether, and millions of buyers are cut off from the market both domestically and from abroad. As a result, the market remains a playground mainly only for wealthy foreigners and super-rich Spaniards. This is more than a solvent customer base, but its demand is very limited.
Maria Matos, spokeswoman for the real estate portal Fotocasa, points out that changes in monetary policy to combat high inflation can, and most likely will, lead to the fact that in the long term the market will finally lose its Spanish demand. A lot of Spaniards have already refused or postponed the idea of acquiring new housing, sometimes even of renting it, and then the situation will only worsen, pushing the general economic crisis and falling incomes of the population. All this will significantly affect the slowdown in market dynamics.
One can cite as an example the November figures for sales of new real estate. This segment of the market is very sensitive to the current economic situation, it depends on problems in the labor market, building materials, energy carriers. It is also the most expensive real estate available on the market, so the wide demand for it in crisis periods falls first of all. In November last year, 9,933 transactions for the sale of housing were recorded in this segment, which is 3% lower than in the same period of 2021.
Price increases in Valencia, Asturias and Catalonia
Looking back at November, it is worth pointing out some regional dynamics. Markets develop at different speeds and sometimes with a significant gap from each other. The decline in the market in annual terms was clearly expressed in the Balearic Islands, in Murcia and Cantabria. Eight more regions, the list of which includes La Rioja, the Canary Islands, Castile and Leon, Andalusia, Baskonia, Madrid, Extremadura and Castile-La Mancha, showed growth, but it was below the national average. In six more regions, including Asturias, Valencia and Catalonia, prices have increased over the year. And in the three indicated — at a rapid pace, by 20% in the case of Catalonia and above 25% in the case of Asturias and Valencia.