The data confirms that the real estate market is entering a new phase. After the sales boom experienced during 2021 and the first half of 2022, operations fell for the second consecutive month in November -8.2% year-on-year, according to notaries. But will prices go down?
The specialists at HelpMyCash.com, a website dedicated to financial and real estate comparison, assure that it is, although the corrections will be rather moderate.
Although the average number of discounts requested by buyers nationwide remains stable —around 20% according to Idealista—, in the city of Madrid, for example, the discount requested in October 2022 on the same real estate portal was 17, 9%; while in November the percentage increased to 19.5%. From the online real estate Housfy confirm this trend:
Faced with this, sales are expected to contract and prices to be corrected during the first half of 2023.
The fall in sales is already a fact. Data from the Notariat confirm that this phenomenon began in October with a 4.9% year-on-year reduction in the number of operations. As they have been able to investigate from HelpMyCash, the trend continues. Why? For two main reasons. The first is directly related to the increase in the cost of mortgages and the tightening of requirements by banks. The second refers to the refusal of the owners to correct the prices.
“There is a part of the population that before could have access to a mortgage loan and now not; which causes the sales to be reduced. But that is not all. Despite the fact that the market forces prices down, many owners who are in no rush to sell, prefer to wait and close the operation later than lower the price of their home”, they explain from HelpMyCash. The consequence of this last phenomenon is the same: if there is no agreement on the sale price, fewer sales will be signed.
The emotional value has always existed, but now it acquires more relevance. In a market where prices tend to go downwards, “it is important that owners value their home objectively,” they advise from HelpMyCash. And it is that the emotional value is that extra price that is assigned to a property based on the affection that the owner feels for it, which leads them to believe that the price is higher than what the market dictates.
“Emotional value hurts negotiation. For this reason, we advise owners to carry out at least three home appraisals, both online and in person, before defining a price strategy; this way they will be able to adapt it to market conditions”, the experts explain.
The evolution of prices and the number of operations during this first semester depends on several factors: the first is the evolution of the Euribor and the consequent increase in the cost of mortgages, which is subject, in turn, to the monetary policy of the European Central Bank; The second, but no less important, is the adaptation of sellers and buyers to this new real estate cycle: are the owners willing to correct prices or do they prefer to wait rather than sell at a lower price?