2023-06-28 20:38:01
Los home purchase prices remain high despite interest rate hike. The indicators show that they are the home rental prices the ones that go up the most. A report released this Wednesday by Solvia ensures that the high financing costs and persistent inflation is having a direct impact on the real estate market with a 1.5% reduction in quarterly activity. Two consecutive quarters of declines are what appears to be the start of a trend that will become chronic in the summer commercial desert, according to most experts.
“The higher costs of mortgages -with the Euribor reference rate above 3.86% in May- and the lower saving capacity of households will continue to mark the future of the residential market during the year,” says Ernesto Ferrer-Bonsoms , Solvia’s Real Estate Business Director “Given this situation, we maintain our forecast that prices will rise moderately, with increases that will be between 1.5% and 2.5% at the end of the year,” concludes Ferrer- Bonsoms.For other analysts, these forecasts are even optimistic.The local real estate office is the one that can suffer a few months of sales drought with a complex output.
Appraisal Society has published this Wednesday a new edition of the ‘Real Estate Sector Trends Report’, which includes information updated to June 2023 both on the evolution of the price of new housing and other own indicators. The study concludes that the average cost of new housing has experienced year-on-year growth of 6.4% in June 2023, despite the current context of rising interest rates and a slowdown in home sales, and has reached €2,809. /m2, still below the maximum levels at the end of 2007 (€2,905/m2). The upward rhythm has moderated compared to December 2022, when it registered an increase of 7.1% year-on-year. The director of Institutions and Major Accounts at the Appraisal Society, Consuelo Villanueva, explained that “these price increases are mainly due to the shortage of new housing supply compared to demand.”
But the evolution of real estate activity goes by neighborhood. La Rioja and Navarra had the greatest increases, with increases of more than 5%, the main decreases took place in Illes Baleares, Galicia and Andalucía, with falls between 4.6% and 7%, according to the Solvia report.
Regarding the provinces, Gipuzkoa, Madrid and the Balearic Islands had the highest prices, all of them above €3,000 per square meter, followed by Bizkaia and Barcelona, which did not exceed €2,900/m2. Malaga, Santa Cruz de Tenerife, Girona and Las Palmas, all of them bathed by the coast, were above €2,000/m2. On the other hand, Ciudad Real and Badajoz did not reach €700/m2. Most of the Spanish provinces, 30, include prices that start at €800/m2, but in no case do they reach €1,500/m2.
Rent
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In the first quarter, the rental price in Spain continued its upward trend and stood at €11.6/m2 per month, which represents an increase of 8.4% compared to the same period last year and 0. 9% compared to the previous quarter. At the provincial level, Barcelona is where the highest rents are found, with €16/month/m2; followed by Madrid (€14.9/month/m2), Illes Balears (€14.6/month/m2), and Gipuzkoa (€14/month/m2); while the province where rents are lowest is Ciudad Real, with €5.4/month/m2. On the other hand, the greatest increases were registered in Granada (9.1%), Jaén (7.8%) and A Coruña (5.6%), and the main decreases took place in Lleida (-21.3%) , Girona (-13.8%) and Ourense (-6.3%).
The evolution of new developments is heading towards a moderation of activity during the whole of 2023, while it continues to be marked by the increase in land prices and the costs of new works, as well as interest rates that remain at levels so high that they make access to credit difficult, both for developers and potential buyers. Given this context, Solvia’s analysis suggests that the levels of construction permits in 2023 will not exceed the levels of the previous year.
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