the rise in mortgages delays purchases and increases the demand for housing

by time news

  • Real estate experts point out that the reduction in rental housing and the increase in mortgage prices will boost prices during 2023


  • From Fotocasa they calculate that rental prices may experience increases of 5%, or higher, throughout the year


  • The increase in prices will be added to the increases registered last year, which exceeded 20% in cities such as Barcelona, ​​Valencia or Malaga

The price of rental housing, which during 2022 already registered a strong upward trend, will continue to grow in the coming months. That is the forecast of the experts who point to greater imbalances between supply and demand to explain the increases that are expected for this year.

The difficulties in accessing the purchase of a home, due to the loss of purchasing power of households due to the increase in inflation and the increase in the cost of financing, will cause many people who had in mind to buy a house, have to delay that decision. That will cause, they predict, that increase the demand for rental properties.

On the other hand, the reduction in the available supply that has been registered since the end of the pandemic seems to have no sign of being reversed.

Cumulative shortage of stock

The housing stock available for rent was reduced last year by up to 25%, according to data from the Idealista real estate portal. A decrease that this company attributes to insecurity, both to recover housing in the event of non-payment and due to the impact of the measures implemented or announced by the Executive and by the regional governments (such as, for example, the cap on prices in the stressed areas that includes the Housing Law, which is in the parliamentary processing phase).

These measures “far from favoring the appearance of a new product on the market, contribute to its disappearance: many owners, once the lease contracts have ended, decide to take their homes off the market and put them up for sale”, they point out from the real estate portal. In the current situation, the only possibility that the offer does not continue to be reduced is given by the economic uncertainty that could delay decisions by potential tenants.

On the other hand, the entry into force of the limitation of rent increases to 2%approved by the Government last spring within the anti-crisis measures and extended this year, is behind, they say from Fotocasa, the increase in prices that were registered in 2022. According to the company, prices recovered since last April everything lost during the covid crisis and came to register increases greater than 20% in cities like Barcelona (the most expensive area to rent a home) or Valencia, and which reached 27% in Malaga.

“Rentals have become a market stressed by the shortage of supply, which has caused the main Spanish cities and provincial capitals to reach all-time high prices,” says María Matos, director of Studies and spokesperson for Fotocasa. With this scenario they calculate that the rental price could register increases of 5% or higher in this 2023.

Also in Idealista they forecast an increase in prices during the year unless the appearance of a new offer in the market is encouraged or the loss of purchasing power of households reduce tenants’ chances of paying and ends up producing the freezing of prices in certain areas.

Prices start the year at highs

The increases in prices that occur this year will accumulate to those registered during this 2022 in which they already increased by 8.4%, on average, according to Idealista, reaching 11.4 euros/square meter per month. A more detailed analysis of the provincial capitals indicates that in up to 48 of them the leases started the year more expensive than the previous one, and that in 32 the increase was higher than that experienced by the general rate of inflation, which stood at 5 .8% according to data advanced by the INE.

Even more, about twenty cities set the highest prices in the series history of the real estate portal, which dates back to 2007.

Thus, to the already notable increases in Mediterranean cities, we must add those of Alicante, where leases grew by 23% or those of Girona, which registered increases of more than 19%. In addition, Idealista highlights the increases in Ourense (15.9%), Teruel (13.8%), Palma (11.9%), Jaén (11.4%) and Madrid (11.2%).

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