Neither prices are expected to fall nor sales to plummet. The prospects for the Asturian real estate market for 2023 are, according to professionals in the sector, “moderately optimistic”. Despite inflation and rising mortgage prices, businessmen are confident that the industry will resist this new year: “There is not the slightest indication that something similar to what happened in 2008 could be experienced.”
The bursting of the real estate bubble, in 2008, caused a shock wave that devastated a good part of the sector: banks turned off the credit spigot, prices fell and many property developers collapsed. The collapse was not overcome until a decade later. Now, there are those who point out that a new crisis may be approaching. The motives? The rise in interest rates to -in a very summarized way- try to curb consumption and thus control runaway inflation throughout the European Union for, among other reasons, the rise in fuel prices due to the Russian invasion of Ukraine.
Despite this, professionals in the sector do not see dark clouds on the horizon of this 2023. If anything, clouds and clear. “I think that what we are going to see is a stabilization of prices in the next six months, but not a drop in prices or a slowdown in sales,” says Katia Domingo Aguinaco, president of the Asturias Real Estate Union, who rules out seeing in a scenario similar to that of 2008 in the coming months. “At that time, no bank gave us a mortgage and now there are builders and producers giving 100% of the mortgage,” the businesswoman stresses on the different circumstances.
Joel García, president of the Asturian Construction Confederation (CAC-Asprocon), the employers’ association of the branch, sees it very similar. “I think that sales will moderate, the rise in prices has scared us a bit and they will adjust prices, but we are not going to face something that we can call a crisis, far from it. In fact, I think that people on the street won’t either. You will notice so much”, says the businessman, who also considers the investments made by European funds a fundamental stimulus for the sector: “In 2023 and 2024 they will anesthetize these problems”.
For now, the official figures seem to prove them right. According to the latest data published by the Ministry of Transport, Mobility and the Urban Agenda, the real estate sector has hardly lost steam so far this year. Real estate transaction statistics reveal that sales, both new and second-hand, have remained stable in the Principality in the third quarter of 2022, the last for which data is available. In this period, 3,201 transactions were registered, compared to 3,463 in the second or 3,331 in the first; figures that are higher, without going very far, than those of some quarters of 2021 or those of any of 2020 or 2019.
Domingo and García also agree that both second-hand sales and new construction will overcome any hypothetical major crisis. “There is still financing, so it shouldn’t be a problem for them either,” says the president of real estate, who points out that the main problem that developers are having is an increase in the cost of materials that, in addition to taking a significant bite out of their benefits, it is also forcing to delay some works.
In this sense, García is also optimistic, since he believes that these circumstances serve to increase the cost of raw materials that, he trusts, will be considered controlled this year. “2022 has been disastrous in terms of profits for companies, because the rise in prices has caught us all with awarded works and in many cases we have had to do them at a loss and we have suffered a lot from the rise in materials. We hope they start now to go down and that we have better prospects”, he affirms while also pointing to the administration with regard to the contracting of works: “They have to keep in mind the current situation and make realistic budgets and in line with today’s prices”.
rents will go up
“A rise is expected in rents,” says Domingo, who considers that this derives from the “legal uncertainty” faced by tenants. “The law is oriented so that the tenant has a lot of strength and the owner is helpless. For this reason, many do not dare to rent apartments and, those who do, raise prices because they are afraid,” says the president of the Real Estate Union from Asturias.