The boom that the real estate market experienced in the last quarter of 2020 was consolidated during 2021 and according to the data collected in the different Property Registries, it continues during the first half of 2022. These data show that investment returns to consider the brick as a safe haven, having a reasonable annual revaluation and not speculative.
The big question is whether this situation will continue over time, considering the new economic crisis as a result of the war in Ukraine, which comes on top of the already existing Covid-19 crisis that still affects certain segments of the population.
At this point we must ask ourselves, how will the rise in interest rates decreed by the ECB influence to curb inflation? To answer this question we should consider various circumstances:
On the one hand, the increase in home purchases with a mortgage indicates that, despite everything, people have/we have confidence in the future because apparently no one gets a medium- or long-term mortgage without such confidence.
On the other hand, we have a new element on the board and that is that another "real estate bubble" is not going to take place because the banks have learned their lesson and once again strictly comply with the Mortgage Market Law and if there is no more or less 35% of the value of the property to be acquired, that is, the 20% that is not covered by the mortgage plus taxes and expenses, does not lend any capital.
The rise in interest rates comes to suppose a small correction of the market and with interest rates around 2.70-3% they continue to be attractive, even when we were used to a negative Euribor (those of us of a certain age remember interest rates of the 15%, without going any further and the drop to 7% in the mid-90s of the last century).
The problem is that with current salaries it is difficult to save that 35% that banks demand. According to the Adecco foundation, for a house of 220,000 euros, taking into account the average Spanish salary and saving 20% of the salary, it takes 7 years to be able to cover the part that the granted mortgage does not reach and 9 years in the cities more expensive, such as Barcelona and Madrid. In the event that it is achieved, even with the rise in interest rates, the purchase is more attractive than the rental (it is enough to compare rental income and mortgage payment).
At this point, perhaps the solution lies in active policies in favor of the construction of social housing owned by public authorities, which limit the sale price and therefore place the mortgage impact at less aggressive levels for the citizens pocket.
