2023-11-03 03:03:55
For those who are on the hunt for a home and hope that prices, now that transactions have begun to drop, will do the same, here is a message from the real estate portals: for now, you can sit and wait. Because, in the short term, price cuts are not expected.
The three main real estate portals that operate in Spain, Idealista, Fotocasa and Pisos.com, yesterday published statistics on the evolution of housing prices in October that point in the same direction: prices continue to rise. Pisos.com assures that prices increased by 8.31% compared to the same month in 2022 and up to 1.49% compared to September. Pisos.com is the portal that points out the highest increases in the Spanish home buying and selling market, placing the average price per square meter at 2,120 euros.
Idealista, for its part, estimates the annual increase at 7.1%, while leaving the monthly increase at 0.4%, placing the price per square meter at 2,016 euros. In the case of Fotocasa, its data points to a month-on-month increase of 0.4% and a year-on-year increase of 6.6%, establishing the average price per square meter at 2,159 euros.
Unlike transactions
Price data thus move in the opposite direction to those of transactions. August closed with a drop in sales of 14.4%, totaling 49,252 transactions, according to data recently published by the National Institute of Statistics (INE). The sector has thus chained seven consecutive declines and so far this year, the fall is 6.5%.
The logic of any market would indicate that if activity declines, prices should also do so driven by lower demand. But what is happening in the Spanish housing market at the moment is that supply and demand are uneven and prevent prices from falling following that logic.
Pisos.com points out that purchase plans are being paralyzed “in the face of unattractive mortgage conditions and prices that set a monthly payment that is difficult to meet without some risk.” With the successive rate increases approved by the European Central Bank (ECB), the price of mortgages has risen significantly. The average interest rate for total mortgage loans stood at 3.62% in August, its highest figure since October 2014, with an average term of 23 years, according to data from the INE. In the case of the initial rate, it rose 1.3 points compared to the same month last year, to 3.25%, its highest figure since July 2016.
However, the Head of Studies at Pisos.com, Ferran Font, warns that the correction or stagnation in the evolution of prices “will take time to arrive” due to lack of supply. In his opinion, it is vitally important that “housing becomes attractive again for investors and developers who buy land and develop new construction promotions.” In this sense, Font points out that “projecting more supply is the only way to balance the market and help reduce price tension.” The manager assures that “the pressure of demand in certain locations pushes up mortgage-free transactions, leaving buyers who need increasingly expensive financing with few options to choose from.” These types of purchases without financing have skyrocketed in recent months. In August, for example, mortgages granted represented 58% of transactions when, historically, this figure has been between 70% and 80%.
Effects on rent
The imbalance in the market, Font warns, is not only harming the buying and selling sector but also the rental sector. “As the funnel of accessibility to purchase narrows, the effects are noticeable in rent,” says the director of Studies at Pisos.com, who also states that “in many cities now people are asked to rent a room, which makes it relatively “Little was asked for a complete floor.”
In line with Font, María Matos, Head of Studies at Fotocasa, states that “although the year-on-year increase figure is significant, if we evaluate the graph with perspective, the trend of slowing down the pace of growth in the price of second-hand housing is confirmed.” hand”. However, he adds, “at the national level, no decreases are expected due to the great imbalance between supply and demand, the productive deficit of new construction and social housing and the intense interest in buying from a solvent and investor profile in the market.” .
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