In an overwhelming inflationary context, the price of housing directly reflects the trends of the economy. With the loss of purchasing power of families, on the one hand, and the constant rises in interest rates, on the other, people think twice before buying or selling a home.
We analyze the available data and consult with experts from the real estate company Housfy, in order to establish an accurate forecast on the price of housing for 2024 in Spain.
The real estate sector in Spain is not the same as that of other similar countries, which is largely explained by the consequences of the bursting of the speculative bubble of 2007-2008. Although some areas, such as the Balearic Islands, are already well above their 2008 record highs, in general the market is acting more prudently than in the rest of the world.
Therefore, the real value of housing has already fallen in 2023, despite its general slight rises, since its apparent increase in price is actually less than the increase in price of other goods.
The market is cooling off and the data confirms it: the statistics of Registrars in Spain reflect a quarterly decrease of -1.5% in the average price of real estate during the first months of 2023. This is the second quarter that presents such behavior.
The Housfy ambassador, David Gordo, points out that in large Spanish towns, such as Barcelona or Madrid, “there is still great demand and interest in buying a home, so there will continue to be slight price increases.” Meanwhile, other locations will register declines from 2023, in which case, he assures him, “they will not be sudden movements.”
The most widespread hypothesis forecasts a chronification of the data for 2024, that is, that the market gets used to these price levels and maintains them over time.
But this will not be the same in all of Spain. If we look at the interannual variation by city in the first quarter of 2023, we will see that the behavior of house prices this last year has been heterogeneous in each city, so different trends are expected in 2024.
Taking data from Spain’s Registrars, the interannual variation of Madrid (7.8%) has doubled that of Barcelona (3.6%). This means that Madrid has gone at a faster pace than the Catalan capital and, if the data is chronified, it could catch up and stay the same in 2024.
In fact, while Barcelona has already presented a small decrease (-2.4%) during the first months of 2023, in Madrid there have still been increases (1.4%).
Second cities such as Cáceres (18.7%), Segovia (16.3%) or Granada (10.0%), where the price has risen more quickly in the last year, are those that would potentially experience a greater price adjustment in forward.
In such a scenario, the population fears an outbreak like the one in 2008. Owners wonder if it is a good time to sell their apartment with guarantees, and also potential buyers consider whether it is better to buy a home now or wait a while.
And the response from the experts is clear: “There is no need to fear a sudden drop like the one that occurred in 2008,” says David Gordo, from Housfy. “This usually happens at times of great economic uncertainty, rising delinquencies and a weak labor marketâ€, a scenario that still looks far from the one we live in today.
Thus, selling a property is still a safe operation, as long as there is capacity to buy homes. Although the market slows down to appease inflation, the risk assumed by banks when granting credit is not so high and the sector does not show pre-bubble symptoms.
If we look at the behavior of house prices in various countries over the last, say, 50 years, we will see that it often repeats the same trend: it rises, peaks, falls and expands again until it reaches a higher peak.
December 2022 was seen as the end of an expansive cycle that began back in 2007 and, in turn, the beginning of another that could last between 12 and 15 years in total. Countries like Sweden, Australia, Canada or the US have recently experienced “overheating”, so a greater price adjustment is predicted for them to correct this upward trend.
This is evidenced by the recent study by CaixaBank Research on real estate markets in advanced economies, whose conclusions confirm what we have been saying: that, in Spain, this price adjustment will be almost imperceptible.
