2023-04-26 14:18:36
Bankinter expects two years of adjustments in the housing market. According to the Real Estate Report published by the analysis team of the financial institution, its forecast is that there will be a drop in both sales and prices in both 2023 and 2024.
Specifically, it predicts that house prices should enter an adjustment phase in 2023, with falls of 3% for this year and 2% for the next, after 10 consecutive years of rises, These falls would accumulate a cumulative setback of more than 12% in real terms, adjusted for inflation, since Bankinter estimates inflation of 4.6% for 2023 and 2.6% for 2024.
Nevertheless, does not rule out a “somewhat larger” price correction if the environment of high rates continues beyond 2024. However, the bank specifies that it will be “a small adjustment, which is far from what happened in 2007.”
The bank’s analysis team points out the increase in mortgage financing costs, the contraction in the household savings rate and the loss of attractiveness of investment in rental housing as the “main triggers” for the price falls.
In the case of sales, the entity also foresees decreases, after 650,000 transmissions were carried out in 2022, the highest since 2007, thanks to the strength of domestic demand and the return of foreign buyers.
However, it rules out the continuation of this trend in the coming years and points to decreases of 14% in 2023 and 7% in 2024. As of that year, the analysis team anticipates a stabilization around 500,000 annual transactions, a level “sustainable in the medium term”.
The bank insists that, unlike the real estate crisis of 2007, there is currently no “excess supply” as housing starts and home creation “are balanced at levels close to 100,000 a year.” In addition, the National Institute of Statistics (INE) forecasts that the creation of households could increase to over 150,000 per year, driven by the arrival of foreigners and the reduction in the number of people per household.
For their part, the land prices they stagnated in 2022, with a drop of 0.1% compared to 2021, and they should follow that line this year and nextaccording to Bankinter.
The effort rate will be around 40%
Regarding the higher cost of mortgage financing, Bankinter warns that the effort rate will rise to levels close to 40%, above the historical average of 35%, as a result of the increase in Euribor and mortgage payments.
At the same time that this occurs, inflation “far exceeds the increase in wages”, with the consequent reduction in purchasing power and the household savings rate.
Regarding the loss of attractiveness of investment in rental housing, Bankinter explains that profitability has been reduced to 3.5% on average in Spain, while the profitability of the Spanish ten-year bond has increased “significantly”, up to the current 3.4%.
#years #falling #prices #home #sales #idealistanews