Slowdown in the real estate market. Despite the fact that the sector had a great year in 2022, the rise in interest rates, inflation and the loss of saving capacity are beginning to affect access to housing. According to the Registrars, sales fell by 7.1% year-on-year in February and accumulated the third consecutive monthly drop.
Experts from the real estate comparator HelpMyCash.com affirm that the repeated rises in interest rates seek to cool the economy to contain inflation, so their impact on the real estate market was incipient. "The setback began in December, when notaries —whose data usually anticipate one or two months to those of the Registry— reported a year-on-year decrease of 17.8% in the number of home sales," the specialists say. But what can be expected for the coming months? Will the prices go down?
HelpMyCash specialists believe that interest rates will continue to rise and, with this, mortgages will continue to become more expensive. "The objective of this measure is to contain inflation in the euro area to 2% and, although improvements are being seen, annual inflation in March was 6.9%," they state. For all this, it is expected that both the rates and the Euribor will continue to increase, which is why many Spaniards will continue to be unable to access a mortgage loan.
In this context, most real estate forecasts indicate that sales will fall in 2023, until reaching an annual variation of between 15% and 30%. But even these predictions can fail in a climate of global economic uncertainty like the current one. And it is that the evolution of the purchases and sales depends on the evolution of the Euribor, and although this indicator has increased at a constant rate since April, in March its rebound has been lower than expected.
“The crisis at Silicon Valley Bank in the United States and at Credit Suisse in Switzerland has set off all the alarm bells. The forecast that rate hikes would moderate as a result of these events contained the rise in Euribor in March”, the experts explain. We will have to wait for the next meeting of the European Central Bank —which will be in May— to anticipate the evolution of mortgage interest and, consequently, of sales in the short and medium term.
Prices, for the moment, remain stable. While in December they increased by only 0.5% year-on-year, in January they fell by 1.7%; according to notaries. And it is that, although there are fewer buyers, there is still a shortage of homes for sale, mainly new construction. According to CaixaBank, between 2020 and 2022, close to 420,000 new homes were created in Spain, while the number of homes started barely reached 300,000. For HelpMyCash experts, this imbalance between supply and demand explains why prices drop by moderate numbers.
For HelpMyCash experts, this imbalance between supply and demand explains why prices drop by moderate numbers.
Of course, the specialists of the real estate comparator have verified that buyers are asking for more and more discounts to compensate for the increase in mortgage prices. For this reason, they advise those who want to sell their property to go on the market with a suitable price, otherwise it could take months to find a buyer.
In this context of change and uncertainty, properties will continue to be sold, but less. “Those who want to sell now will have to redouble their efforts to define a market price. Asking a real estate agent for advice is a good way to do it ”, they assert from HelpMyCash.
