The Spanish real estate market is undergoing changes and starting a new cycle of deceleration in the sale and purchase of real estate. These new changes clearly show the current real estate situation of the country and its growth in this last year. The real estate situation of 2023 has had a big change if we compare with the one lived in 2022, do you want to know how it has been and what are the perspectives for the real estate market? Stay and find out!
What is the current situation of the real estate market in Spain?
In recent years, the Spanish real estate market has shown a steady recovery after the economic crisis and the real estate bubble of 2008. For example, in 2023 we can speak of an increase in the demand for housing, both for purchase and rental.
But what is the reason for this? Well, sustained economic growth, job creation and low interest rates. All these factors have boosted demand for housing from both domestic and foreign buyers.
In addition, the stabilization of the banking sector and improved financing conditions facilitated access to mortgage loans. As a result, real estate transactions increased.
However, as regards the rental market, there was a significant increase in rental prices in the main Spanish cities. Especially in Barcelona and Madrid.
This increase is due to the shortage of housing available for rent. As a result, there has been greater competition among tenants and an increase in prices.
Another important aspect to take into account is the rise of tourist housing and its impact on the real estate market. The popularity of platforms such as Airbnb has led to an increase in the supply of tourist accommodations, especially in tourist areas and major cities.
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What will housing values be in 2023?
Homes have experienced a change in their values in the real estate market. This is due to different trends and fluctuations compared to previous years.
This change in home values is also influenced by the improving economy, increased demand and favorable financing conditions.
In the main cities and tourist areas, such as Madrid, Barcelona, Valencia and the Balearic Islands, prices experienced a significant increase. This is due to the high demand for housing in these areas by domestic and foreign buyers. But not only that, the shortage of housing supply in these areas also contributed to the rise in prices.
In some rural areas and smaller towns, housing values have experienced more moderate growth, or even remained stable. These areas tend to have more limited demand and a more abundant supply of housing.
The evolution of housing values may vary according to geographic location and other factors specific to each region. It is essential to consider the dynamics of supply and demand in the real estate market. This could have a moderating effect on price increases, as greater supply could balance demand.
What are the interest rates and mortgage increases expected in 2023?
Interest rates are a tool that central banks use to control inflation. Existing loans, such as mortgages and personal loans, have interest rates that increase along with the general interest rate.
In this way, central banks manage to reduce the overall demand for goods and services (less credit = less consumption) and cool the economy so that prices do not continue to rise violently. In this regard, ECB interest rates will rise from 0% to 31.50% in 2022 and 2023, four times each.
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How does inflation affect the real estate market?
Inflation in Spain is the generalized and sustained increase in the prices of goods and services in the economy.
The inflation rate is measured by the consumer price index (CPI). It measures changes in the prices of a basket of goods and services representative of household consumption.
In Spain, the inflation rate has remained relatively low in recent years. Although, there have been some fluctuations due to factors such as the increase in oil prices and the COVID-19 pandemic.
Also keep in mind that if inflation rises it can affect consumers. That is why we bring you some cases:
In the case of entrepreneurs, the increase in inflation affects them in several ways, such as:
In short, inflation can negatively affect companies by increasing costs and reducing purchasing power.
How do interest rates affect inflation?
Interest rates are a tool used by central banks to control inflation and economic growth. Therefore, the relationship between interest rates and inflation is inversely proportional when there is a general increase in prices.
If interest rates are high, they can dampen inflation by increasing the cost of credit and reducing consumption. Meanwhile, low interest rates can stimulate economic growth. Because they reduce the cost of credit and increase consumption.
In addition, inflation causes the currency to lose value. Central banks change the interest rate to control rising inflation. Low interest rates tend to generate higher inflation, while high interest rates tend to have lower inflation.
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Do you want to settle in Spain to carry out your business idea? It is important that you know the current situation of the Spanish real estate market, your stability is what will guarantee that your business will be successful.
Do you need real estate advice? Contact us at tasconsultoria@tas-sl.es and schedule your appointment with us. Our professionals will provide you with the help you need to take your company into the future.
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