The real estate sector in Spain is forecast to slow the pace of home sales growth down, which is associated with unstoppable inflation and higher interest rates on lending by the European Central Bank (ECB). At the same time, a 5% rise in residential real estate prices is anticipated across the country in 2023.
The number of home sales transactions on the national market has risen steadily and significantly over the course of 16 months, ending in June 2022. The National Institute of Statistics (INE) of Spain has consistently recorded exceptionally good growth rates from one period to another. The decline in sales was hardly noticeable even after the Euribor index reached positive figures for the first time since 2016.
Ferran Font, Director of Studies at Pisos.com, says: “The first half of 2022 has shown the Spanish real estate market’s ability to stay resilient despite the challenging international situation and rising mortgage rates.” No market, however, can defy obvious economic tendencies.
According to the most recent Pisos report for the first half of 2022, the increase in prices during this time period compared to the same period in 2021 suggests the development of a strong trend for price growth in the next year and a half. This growth will be especially noticeable in the sector of brand-new buildings. And, at the same time, this trend is not expected to last for very long, especially considering the shifts in modern European monetary policy.
Demand in the market is destined to start declining, and together with it, prices will begin to fall, as a result of growing inflation, higher lending costs, falling population incomes, and an overall increase in household spending. Euribor had already closed at near 1% by the end of August 2022.
The Spanish Real Estate Personal Shoppers’ association (Aepsi) has already expressed its opinion on the offered forecast. The association believes that real estate investment will mainly occur in the markets of major Spanish cities. In these areas, property prices will keep rising.
Large cities like Barcelona and the country’s coastline regions are also in high demand and will likely remain so in the foreseeable future. There, historical highs in terms of investment volume and number continue to be broken. In Barcelona, Pedralbes, Sarria-Sant Gervasi, Ensanche Derecho, and Pueblo Nuevo are some of the most sought-after districts.