The rise in rates and the call for elections bankrupt real estate activity

2023-06-06 20:43:41

He election announcement for the next July 23 is collapsing the real estate activity precisely in the most complex months of the year for the sector, before the summer season. It seems that this year the double payments can avoid projects of change of housing in moments of interest rate rise, bank credit restriction and inflation. The latest data from the National Institute of Statistics (INE) already corroborated the feelings of real estate firms and the data known this Tuesday from the registrars deepens the complex situation with data. The registrars reported the “important drop in mortgages and a more moderate drop in home sales during the month of April.” Specifically, the sale of housing Registered companies fell by 8.7% in April compared to the same month of the previous year. Mortgages constituted on housing accelerated their decline to 19.3% annual. Five consecutive months of declines accumulate, after continuous growth since March 2020.

From the 92,648 operations carried out in April 2022, it has risen to 84,195 in April this year, about 8,500 fewer operations. Home sales also decreased significantly, although more moderately than the total, from the 46,163 registrations in April 2022 to 42,139, which represents a reduction of more than 4,000 operations.

During the months of March and April there was a sharper drop in mortgage firms, with falls close to 20%. In housing mortgages, 25,945 operations were constituted in April compared to 32,149 in the same month of the previous year, with some 6,200 fewer operations. In addition, intermediaries in the real estate sector confirm that clients are having problems getting home loans. In parallel, those with mortgages are facing early cancellations to minimize the impact of the rise in rates of interest.

By province, during April, the annual evolution of total sales, compared to the same month of the previous year, once again shows generalized decreases, especially in the Autonomous City of Ceuta (-50.0%), the Basque Country (-28 0.0%), La Rioja (-20.4%), Balearic Islands (-17.1%), Aragon (-13.6%), Galicia (-12.6%), Catalonia (-12.4%) and Extremadura (-11.8%). Only in Melilla (265.2%) and in the Valencian Community and Cantabria (both with 3.5%), there have been increases. In relation to the total mortgages constituted compared to April of the previous year, they fell more in Extremadura (-31.1%), the Balearic Islands (-28.8%), La Rioja (-28.6%), Navarra and Catalonia (- 28.4%) and Galicia (-27.6%), while they increased in Ceuta (140.9%), Melilla (51.7%), Valencia (7.0%), and Aragón (6.2% ).

question of prices

In terms of prices, data from the Tinsa appraisal company, the average price of new and used housing in Spain increased by 0.3% between April and May, which places the interannual variation at 4.8%, a level more moderate than in the previous month and than in May 2022. “The average national residential price continues its tendency to stabilize due to the increase in the cost of financing and the loss of purchasing power in the face of inflation, although employment remains sustained household solvency. Consequently, the buying and selling activity is gradually moderating, maintaining levels above 2019”, points out Cristina Arias, director of Tinsa’s Research Service. The analysis by areas, however, shows disparate behaviors between the areas with the highest reception of tourism and the rest. “The islands and, to a lesser extent, the Mediterranean coast are experiencing a new boost in prices that could be a reflection of the buying and selling activity in the second home segment. Buyers in this segment have greater purchasing power and are less sensitive to inflation and the increase in mortgage costs, since they often require less external financing to acquire a second home”, explains Arias.

The data from Fotocasa, also released this Tuesday, offer a somewhat different fixed photo and with slightly higher average price increases. Thus, the price of housing rose 6.4% year-on-year in May in Catalonia, up to 2,744 euros per square meter in May. The Fotocasa Real Estate Index indicates that the 17 autonomous communities increased the average year-on-year price in May. In six communities, it exceeds 10%, specifically, in the Balearic Islands with 22.7%, Navarra with 20.2%, the Canary Islands with 17.9%, the Valencian Community with 12.0%, La Rioja with 10.5% and Andalusia with 10.2%. They are followed by the Region of Murcia with 9.3%, Catalonia with 6.4%, Cantabria with 5.4%, Aragon with 5.3%, Extremadura with 4.8%, Castilla-La Mancha with 4.8 %, Madrid with 4.7%, Galicia with 3.4%, Castilla y León with 3.0%, the Basque Country with 2.7% and Asturias with 2.3%.

The price of the most expensive second-hand housing in Spain is found in the Balearic Islands and Madrid, with prices of 3,679 euros/m2 and 3,446 euros/m2. They are followed by the Basque Country with 2,968 euros/m2, Catalonia with 2,744 euros/m2, the Canary Islands with 2,123 euros/m2, Navarra with 2,012 euros/m2, Andalusia with 1,897 euros/m2, Cantabria with 1,863 euros/m2, Aragon with 1,692 euros /m2, Galicia with 1,672 euros/m2, Valencian Community with 1,646 euros/m2, Asturias with 1,607 euros/m2, La Rioja with 1,597 euros/m2, Castilla y León with 1,466 euros/m2, Region of Murcia with 1,249 euros/m2 , Extremadura with 1,215 euros/m2 and Castilla-La Mancha with 1,169 euros/m2.

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Barcelona is the most expensive province with 3,051 euros/m2, followed by Girona (2,399 euros/m2), Tarragona (1,722 euros/m2) and Lleida (1,266 euros/m2). In the four provincial capitals with year-on-year variation, the price rose in May compared to the previous year. The capitals with the highest increase are: Girona capital with 7.0%, Lleida capital with 5.2%, Tarragona capital with 4.2% and Barcelona capital with 2.3%. The most expensive provincial capital is Barcelona with 4,415 euros/m2, followed by Girona capital (2,607 euros/m2), Tarragona capital (1,660 euros/m2) and Lleida capital (1,295 euros/m2).

Districts of Barcelona

The average price of second-hand housing in Barcelona rises in nine of the ten districts with year-on-year variation analyzed by Fotocasa. The increases in housing correspond to the districts of Nou Barris with 7.9%, Gràcia with 7.6%, Sant Andreu with 6.6%, Sarrià – Sant Gervasi with 5.5%, Sants – Montjuïc with 4.8 %, Horta – Guinardó with 2.9%, Sant Martí with 2.0%, Eixample with 1.6% and Ciutat Vella with 1.1%. On the other hand, the district where the rental price fell is Les Corts with -0.1%. Regarding the price per square meter in May, the three most expensive districts are Sarrià – Sant Gervasi with 6,073 euros/m2, Eixample with 5,475 euros/m2 and Les Corts with 5,288 euros/m2. On the other hand, the districts with the cheapest housing prices are Nou Barris with 2,721 euros/m2 and Sant Andreu with 3,238 euros/m2.