Home sales closed 2023 with a drop of 9.7%, to 586,913 units, and put an end to the mini real estate boom caused by the pandemic in 2021 and 2022, when thousands of families considered that their home did not fit already to a way of life that allows you to spend more time at home and visit the office less and sales shot up by 34.8% and 14.8% respectively.
According to data published this Thursday by the National Institute of Statistics (INE), sales initially rebounded in January but fell last year in the following eleven months. December recorded the lowest sales figure in three years, since December 2020, and transactions fell 15.6% year-on-year, to 36,698 sales.
Although in 2023 transactions only increased in January compared to the previous year, the real estate market has resisted the brutal increase in interest rates much better than experts anticipated, with a Euribor that exceeded 4% in September, so there have only been 63,352 fewer sales, and prices have remained the same. "2023 continues to be the second best real estate year in Spain since 2007," recalled María Matos, Fotocasa spokesperson.
The strength of the market has been largely sustained by the sale of new homes, which has gained weight to account for 18.6% of transactions, with 110,894 transactions. Developers have sold 5,564 fewer homes (a decline of 4.8%) compared to 2022, a year that marked the highest new construction sales since 2014.
The second-hand market, with buyers with lower purchasing power and who therefore need to go into debt more frequently to close the transaction, was the one that suffered the most: it had a drop in sales of 10.8% last year, to 476,019 transactions, 57,788 less than in 2022, with six months of sales falling at double-digit rates. In December, 29,820 used apartments were sold, the lowest figure in three years and 16.4% less than in December 2022.
Home sales fell last year in all the autonomous communities except in Asturias, where 5.6% more homes were sold than last year. Among the large markets, the falls suffered in the Balearic Islands and Madrid stand out, of -20% and -16%, respectively. Sales also fell sharply in La Rioja (-18%) and more moderately in the Canary Islands (-14.4%), the Basque Country (-12.5%), Galicia (-12.4%), Andalusia (-11. 3%) and Catalonia (-10.7%).
According to Ferran Font, director of studies at Pisos.com, in 2024, home sales “will continue to be marked by the evolution of the Euribor, which is expected to see a change in the clearly upward trend of recent quarters, as well as by the uncertainty that "They generate both the consequences of the different international armed conflicts and the application of the new Housing Law."
The granting of mortgages, for its part, fell by 17.81% last year, to 381,560 loans, according to data also published today by the INE. It is the largest decrease in the granting of loans since 2013, in the previous real estate crisis, and places mortgage activity at the level of 2020.
As in the case of sales, only in January did the granting of mortgages increase, and it decreased in the following eleven months. The capital lent stood at 54,209.6 million, with a decrease of 19.4%, in its first drop in nine years, and the average amount fell 2.0%, to 142,074 euros, 3,840 euros less than in the year former.
In December, 24,927 mortgages were signed, 17% less than December of the previous year and the lowest figure since August 2020, in the midst of the pandemic. In the last month of the year, the average interest rate was 3.32%, equaling the maximum reached in October, and the average repayment term was 24 years. In December, with a Euribor at 3.68%, mortgages signed at a variable rate had an interest rate of 3.07% while it reached 3.54% for fixed rate mortgages.
In 2023, 60% of mortgages were granted at fixed interest, a mortgage modality that accounted for 71% of loans in 2022, the record in the INE's historical series. The banks, however, have made these loans especially more expensive due to the rise in the Euribor, so that their granting has been reduced month by month and in December they were only 54.2% of the loans, with 45.8% of variable rate home mortgages.
The tightening of mortgages has profoundly changed the real estate market: sales of luxury apartments and those of apartments with a price of around 100,000 euros in second home areas close to large capitals remain strong, because their potential buyers do not need a mortgage to close the purchase. Thus, according to INE data, if in 2020, in the midst of the pandemic, 80.4% of homes were purchased in Spain with a mortgage, in 2023 it was only 65%.
Experts also predict an improvement in mortgage conditions for this year. According to Javier Torres, mortgage director at Clikalia, the improvement has already begun at the end of 2023, although it is not yet reflected in the INE data, which has a delay of about two months compared to the moment of signing the mortgage. “At Clikalia we see how some banks are betting on rate improvements and already relaxing certain requirements on the customer profile. Adding these two factors, the future outlook is more reasonable trading volumes than those we saw in 2022,” he assures.
