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News
The panorama of the real estate market in spain 2023 - 2024
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05
SEP
The panorama of the real estate market in spain 2023 - 2024
The Spanish residential real estate market has impressively rebounded after the 2008 recession and, more recently, from the COVID-19 health crisis. Current data, however, suggest that the golden era the sector experienced during the pandemic's recovery might be coming to an end. Although a dramatic drop in transactions is not anticipated for the second half of 2023, the outlook has nuances.
Various circumstances and factors play into this scenario. According to analysts from the Appraisal Society, the shortage of supply, especially in the new construction segment, will continue to put upward pressure on prices until the end of the year. Added to this is the solvent profile of the current buyer, which acts as a bulwark against potential negative effects that may arise due to the increased cost of financing from rising interest rates.
This dynamic is particularly evident in cities like Madrid and Barcelona and Valencia, which act as "attraction poles" for the population. The demand in these cities outpaces supply, even though they account for a significant 16% of the country's new housing production. The trend is clear: Spain needs to build more homes. The data is compelling: currently, six times fewer homes are being built than 15 years ago.
Furthermore, construction costs have risen significantly, 8% in the last year, and almost 27% since the months preceding the pandemic outbreak. Despite this increase in costs, the impact on the sale price is gradual. However, for protected housing, the effect is more direct, as many price caps have not been revised since 2008, particularly affecting housing promoted by private entities.
The solution, according to experts like Consuelo Villanueva, lies in increasing supply, with a particular focus on protected housing. Currently, this type of housing only accounts for 10% of the residential properties being built, a figure significantly lower compared to other times.
Regarding the used housing market, which constitutes the bulk of transactions, it is expected to experience a more significant drop compared to new housing. However, prices continue to rise, albeit at a slower pace.
In conclusion, the Spanish real estate market faces multiple challenges and opportunities. Despite the rise in interest rates and other economic concerns, the sector shows resilience, largely backed by sustained demand and a buyer with a strong financial profile. However, addressing supply and demand challenges will be essential to ensure the market's long-term stability.
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