With more free time and better weather, Spaniards are more receptive to changes. This type of change can range from changing clothes, to changing floors, but ... is summer a good time to buy a home? Most of the experts consulted say that the price will remain in the coming months, although there is a relevant demographic factor for the real estate market, a large cohort of the population that will replace their habitual residence with another residential in areas of the coast, And that's an upward pressure factor on prices. In areas such as the Mediterranean coast and the islands is where you can see this incidence with a tendency to grow.
The price of housing, represented through the methodology of repeated sales (Repeated Sales House Price Index -IPVVR-), has registered a quarterly growth of 1.29%, according to data from the first quarter of the year given by the college of registrars. The year-on-year rate stood at 5.43%. With respect to the nearest minimums (2014) a growth of 59.48% is accumulated, standing 0.08% below historical maximums (2007).
According to the INE, during the first quarter of the year, they advanced again (+0.6% quarterly vs. -0.8% the previous month). Carlos Balado, professor at OBS Business School and director of Eurocofín, states that, despite this quarterly advance, in year-on-year terms the growth of house prices intensifies its moderation to a growth of 3.5% compared to 5.5% previously.
By type of housing, the annual rate of new housing falls two tenths, to 6%. For its part, "the variation of second-hand housing stands at 3%, more than two points below that registered in the previous quarter."
While Cristina Arias, director of Tinsa's Research Service, points out that Tinsa Research expected a gradual trend towards the stabilization of residential prices. "As we indicated a year ago, after the outbreak of the war in Ukraine, we estimated that inflationary tensions would be pronounced and thus household savings would be eroded, while interest rate increases would begin and access to financing would be difficult. All of this would moderate demand for housing, as indeed is happening."
An evidence-based rule of thumb across countries is that every 1 percentage point increase in real interest rates slows the pace of house price growth by about two percentage points, according to the IMF.
Thus, and with the effect of the rise in interest rates on the price of housing, and given that in Spain rates have increased three percentage points since July last year and housing by 8 percent, "it is expected that the rise in prices for 2023 will be around 2 percent, since, in addition, interest rate increases are reaching the maximum established by the ECB for this year, 3.75 percent and, therefore, the new increases pending application would be 0.25 basis points each, that is, it would not reach a point. "
To the extent that inflation persists, as it seems that it will happen during this year and, as a consequence, rates continue to rise, Carlos Balado believes that the cost of financing will be more expensive and for that reason the demand will be reduced, But this won't really be seen until the latter part of the year. A priori, everything indicates that sales will be around 480,000 units, below the last two years and when sales fall so do prices.
For Tinsa, residential prices in the field of sales will continue to trend towards stabilisation. They believe that in the last two months there have been increases on the Mediterranean coast and islands, while in large cities, metropolitan areas and inland areas stabilization is consolidating.
"This may be indicating a boost in sales of second homes, as well as in sales by foreigners. These buyers have greater purchasing power and are less sensitive to inflation and rising mortgage costs, as they often require less external financing for the acquisition of a second home," according to Cristina Arias.
While the professor of OBS Business School is of the opinion that there is a relevant demographic factor for the real estate market, a large cohort of the population that will replace their habitual residence with another residential in areas of the coast, and that is a factor of upward pressure on prices. In areas such as the Mediterranean coast and the islands is where you can see this incidence with a tendency to grow.
The national average in year-on-year terms is 4.8 percent, on the Mediterranean coast it stands at 4.7 percent, in the capitals and large cities 4.3 percent and in the rest of Spain at 3.3 percent, according to Tinsa data.
However, there is a great dispersion within these areas, as Carlos Balado points out. Thus, for example, within the Mediterranean coast, in Castellón the price per square meter is 1,328 euros, and in Murcia 1,465 euros, compared to a maximum of 4,415 euros in Barcelona, 3,966 in Palma de Mallorca or 2,989 in Malaga.
"As for the Canary Islands, prices vary from 2,365 euros in Las Palmas to 1,961 euros per square meter in Santa Cruz de Tenerife."
And if it is in the interior of Spain, the differences are notable between 4,305 euros in Madrid to 1,684 euros in Guadalajara or 1,592 euros in Toledo.
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