The real estate sector in Spain is performing better than expected and, according to the May macroeconomic report prepared by CaixaBank Research, activity in the months of January and February places 2024 as “the year with the best start of the sector since 2008 , the year in which the real estate crisis broke out.”
A more detailed analysis included in the Sector Observatory indicates that 2024 will be “a transition year that gives way to 2025 in which we expect the real estate sector to expand again.” Already in 2023, home sales resisted the increase in interest rates much better than expected, leaving a more positive balance than was assumed, according to data from the research service.
For the first half of 2024, a balance of falls in sales compared to the previous year is still expected, which will change in the second half. “During 2024, real estate activities will maintain a growth rate around the average, similar to that of the economy as a whole,” but there will be a turning point starting in June. “In the second half of the year, as the downward trend in interest rates takes hold and economic activity gains traction, we expect the real estate market to regain vigor and follow an upward path,” the report notes.
Regarding the housing supply, it is expected that this year “it will grow somewhat more dynamically”, despite the fact that “the current factors that are preventing a greater reactivation of the supply are still present, such as the costs of construction and high financing, although both with a tendency to decrease.
By 2025, the study predicts that housing production could increase somewhat more dynamically if the right conditions for this are met, such as the availability of land or the promotion of public-private collaboration for the promotion of affordable housing.
CaixaBank affirms that the construction sector will benefit from the deployment of European funds, “both residential construction, with the promotion of housing rehabilitation, and non-residential construction, thanks to projects dedicated to the development of infrastructure, such as railway networks”.
The report warns that “the supply of new housing – around 110,000 units per year – is much lower than the structural demand due to demographic evolution, with the creation of 287,000 net homes in 2023 according to the Active Population Survey , due to the notable increase in migratory flows.”
This increase in demand is in line with the impact it is having on household wealth both in Spain and in Europe. Since the pandemic, the net wealth of families in the eurozone has increased by almost 20% thanks, above all, to the increase in net wealth in housing, whose ownership accounts for 57% of the average net wealth of families in the EU . The percentage reaches 73% in households with the lowest income.