Housing prices continue their upward march, which began 37 quarters ago, apparently immune to the rise in interest rates and the fall in sales. Thus, according to data published this morning by the INE, prices have accumulated an increase of 3.6% compared to last year, a rate that is one tenth higher than in the previous quarter. The increase is 2.9% in second-hand homes sold (which slowed down by one tenth) and 7.7% in new construction.
In the second quarter, the INE points out, prices have reversed the weakness that they had shown since the outbreak of the war in Ukraine, and are rising again at rates unknown since 2021. Thus, the increase compared to the previous quarter has reached 2. %, compared to the 0.6% recorded in the first quarter, and the 0.8% drop that closed the last quarter of 2022. By type of home, new home prices rose 1.7% between the second and first trimester. For their part, second-hand housing prices increased by 2.2%.
Housing prices have risen in the second quarter of 2023 in all autonomous communities, according to the INE, with the largest year-on-year increases in the Foral Community of Navarra, Cantabria, Andalusia and the Canary Islands, with increases of 5.6%, 4 .7%, 4.5% and 4.5%, respectively. For their part, Murcia (1.4%), Extremadura (1.8%), and Castilla-La Mancha (2.0%) registered the lowest annual increases. In Catalonia, the year-on-year increase was 3.2%, lower than the state average, while in Madrid it was 4.1%.
Compared to the previous quarter, prices also increased in all communities, both for new and used housing, with increases ranging from 3% in Extremadura to 1.1% in the Canary Islands.
In second-hand housing, growth rates slow down. It must be remembered that the prices of new housing correspond to the signing of the sales deed of homes that were mostly bought off plan, signing a deposit contract, more than a year ago, when they had not yet begun to harden. the requirements to obtain mortgages.
Real estate sources highlight that the aggregate data hides the differences that are occurring locally. Thus, the appraiser Tinsa published yesterday the data of its appraisals for August, the month in which the price of housing fell 0.1% compared to the previous month due to the modest price decreases that occurred in the capitals and large cities. (-0.1%), as well as in the rest of the smaller municipalities (-0.4%). In year-on-year terms, however, Tinsa notices a price increase in all markets, which according to its data was on average 5.3% compared to the previous year.
Various experts point out that price resilience “was foreseeable” and will continue. Patricia Rodríguez-Lázaro, investment director of Clikalia, pointed out that “the rise in interest rates is leaving potential buyers with low financial capacity out of the buying and selling market. In the provincial capitals, the demand from buyers with financial capacity continues to be much higher than the supply of housing.” According to the directive, “last year alone, more than three times as many new homes were created in Spain as the number of completed homes, adding free and protected housing,” which allows us to anticipate that prices will not drop.
On the opposite side, for Ferran Font, director of studies at the Pisos.com portal, “moderation (of prices) has to come at some point because it is unsustainable for sales and loans to fall and prices to evolve in the opposite way for a long time. ”. Font foresees that this “logical slowdown” will take place, at the latest, “in the first quarter of 2024, although in a very localized manner.”
According to Francisco Iñareta, spokesperson for the Idealista portal, their data “show that there is still a significant demand for home purchases, and that many of the families that maintain their buying interest already own another home, so their needs of financing (and the consequent impact of the increase in cost of the same) is much less”.
For Maria Matos, spokesperson for Fotocasa, “at the moment, no significant price declines are expected, what is certain is that the tensions between supply and demand will make an extensive correction difficult. The interest in buying still exceeds pre-pandemic levels, and the reduction in supply during this past year will make it even more difficult to reach a balance quickly," since there are many interested parties waiting for price drops to buy, while sellers resist. make discounts because sales continue to be closed. In his opinion, in the coming months "some adjustment is to be expected in specific areas of low demand, but far from major declines."
