2023-09-15 10:42:20
In the housing market, Vigo is a place with its own nuances. The data reflects that, in Galicia, mortgage signing has fallen by 30%. But Vigo, which is not completely far from this reality, has three legs of a bench that depicts a city stagnant in the promotion of new housing against existing demand, and a consumer with a diverse profile. The fact that the Euribor has risen above 4%, spurred by the ECB’s rate hike, has had a varied response from the people of Vigo. On the one hand, it has slowed down home buying and selling in general; On the other hand, it has triggered cash payments for an already expensive product. It is estimated that in Galicia about two-thirds of purchase and sale operations are carried out under this model, according to data from the General Council of Notaries, “the percentage of loans for housing is very low,” the College of Notaries of Galicia emphasizes. Something that is repeated in Vigo.
“Only 43.7% of home sales in this second quarter were carried out through a mortgage, while the rest was carried out with own resources or money from the sale of other properties. And consumers with less purchasing power (young people and the middle class) referred to the rental market. But in the Vigo area, one in every two sales is in cash,” says Benito Iglesias, president of the Galician Federation of Real Estate Companies (Fegein). “The rise in the price of money to 4.5% will further reduce mortgages and home purchases,” he predicts. And he clarifies that it is due to a change in the buyer’s profile. “Along with those looking for their home, there are investors.”
This movement of “own” money is carried out in a context in which the price of housing in the Olívic city has decreased, according to data from Idealista. Yes, May was the record month, with the square meter at 2,101 euros. July and August experienced a drop to 2,082 euros. Both Fegein and the promoters’ association maintain that the local market is moderately stable, but they note a drop in purchase operations. For Javier Garrido, president of the Association of Real Estate Developers of Pontevedra, this responds to the fact that “you cannot sell what does not exist. A General Plan is necessary, because the qualification of the land, which is in the hands of its owners, results in the plots necessary to build new housing. “They have to be able to sell those lands to the developers.” And he agrees that the rise in interest rates “has slowed sales because people do not want to get a mortgage; those who have 60,000 euros plus help from the family can avoid it.”
Thus, people would be looking for alternatives to alleviate the effects of an “expensive” loan by mobilizing their own capital and that of the family, a new trend that would be reflected in the formalization of documents before a notary. “The interest of the people of Vigo in obtaining financing options outside of personal loans and mortgages is appreciated. It is perceived in the improvement and advance agreements of inheritances, for example. The percentage of debt for a home is very high, but it is clear that families help. Mortgages followed the trend of the previous year at the beginning of the year, then financed purchases slowed down. In addition to the mortgage price, the political instability that the local and general elections generated did not help either. Real estate is a very sensitive market,” appreciates Jaime Romero, a notary from Vigo.
All the sources consulted point out that the Vigo market needs interest rates to stop rising and the PXOM to move forward, to satisfy demand and for the qualification of the land to meet the needs of Vigo.
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