The creation of companies in the real estate sector grew by 15.3% in the first two months of the year, according to data from the appraiser Gesvalt. A boom driven by the resilience of the sector and the arrival of European aid from the Next Generation EU funds, as explained by José Antonio Salomón, director of market research at the firm. The increase has remained high in recent months and in February, the last month with available data, and the largest increase occurred in the creation of construction companies (22.7%), while the creation of real estate companies grew by 10.3%.
In absolute terms, the communities in which the most companies dedicated to the real estate sector have been incorporated in the first two months of 2023 are Madrid (899 incorporations), Catalonia (893), Andalusia (811) and the Valencian Community (591). Madrid, with a growth of 18% in the creation of new companies, and Catalonia with a growth of 22%, also stand out for a better evolution than the Spanish average, although the growth rates are greater in smaller communities, where a small increase in the number of businesses shoots up the percentages. Thus, the biggest growths have been in La Rioja (60%), Asturias (54%) and Navarra (33%).
"Not only is the creation of companies increasing, but dissolutions have fallen by 3%, with which the net balance is still higher", pointed out Salomón, who recalled that the creation of companies in this sector already performed better in 2022 than the economy as a whole.
"There continues to be demand for the purchase of housing, because many operations are closed without financing, thanks to the savings accumulated during the pandemic and because many purchase decisions have been accelerated to anticipate the rise in rates", he remember.
In his opinion, there is also a lot of activity in the commercial sector and in offices, in the center of the cities. "And above all there is a commitment to the energy rehabilitation of homes and offices, thanks to European and administration funds. Many companies are being set up to manage these lines", he pointed out.
According to Salomón, "although there is concern in the sector about economic uncertainty, and it is clear that 2023 will not be a record year, the creation of companies reflects how professionals warn that there are good prospects for the coming months".
Thus, the appraiser's data reflect that in the first quarter house prices have grown in a general way throughout Spain for the first time since the pandemic: 6.7% compared to 2022, which is the largest increase since covid, after seven consecutive quarters of increases above 3%. With this new increase, the average house price in Spain has reached 1,536 euros/m2, still 28.3% below the historical high recorded in the first quarter of 2008.
Gesvalt's data, however, point out that rising prices and rising interest rates, in an environment where wages have barely grown, have raised the theoretical effort required to buy housing per of families: the installments to be paid already represent 36.1% of the gross disposable income of families in the last quarter of 2022, and exceed the threshold of 35%, which the bank considers a debt level excessive
According to Salomón, activity has been maintained in recent quarters, despite the worsening of accessibility, but it is foreseeable that transactions will be slightly reduced in the coming months due to the tightening of financial conditions. "We don't see joy in financial institutions in the granting of mortgages, and in the last two months, in fact, fewer mortgages have been given and purchases financed only with own funds have increased."
From his point of view, this situation will mean that in the coming months the purchase demand will go to worse properties, or from secondary areas, where families can still buy with a level of debt acceptable to the banks, and it will also favor a increase in demand for rental housing.
Real estate activity, in this sense, could not suffer much from the rate hike. "Everything will depend on how long rates remain high. In my opinion, they will be for at least a year, but then they could start to go down and the market will recover”.
