Author: Vojislav Kovačević
Publication date : 02.08.2023
The real estate market has recently raised uncertainty on buying properties. This left many prospective homebuyers wondering if now is the best moment to take the plunge into homeownership. In fact, making a smart choice can be difficult with so many economic and societal elements at play. Therefore, in this article, we'll look at the current situation of the housing market. So, it will help you assess the benefits and drawbacks of purchasing a home right now.
Real estate market trends
Spain’s Independent Authority for Fiscal Responsibility (EIReF) thinks that a recession will hit the Barcelona real estate market in 2023. What will happen to real estate prices in the coming period, and will prices experience a crash like in 2008?
If we look at the House Price Index, where we set 2015 as the base year, we can see what has actually been happening with property prices in previous years. According to the data, we can conclude that real estate prices in the EU have increased by more than 50% on average since 2015.
Moreover, in the coming period, we expect a decrease in real estate purchases in Barcelona because of the rise in interest rates. This will put buyers off taking out a mortgage. Apart from that, due to the decline in the supply of new-build properties, the cost of materials will remain high.
Last year, a record was almost reached when we talked about house sales. Over 650,000 properties changed hands in Spain last year. This is the highest number since 2007 and almost 100,000 more than in 2021 and 2020. However, in recent periods we have seen that real estate sales are slowing down due to higher interest rates. This also happens because of the reduced new construction associated with high material prices.
Therefore, by the end of the year, experts expect around 14% lower sales compared to the previous year. In other words, by the end of the year, we expect a slight increase in real estateprices in Spain.
Conclusions
In short, the Spanish real estate market is facing a year of slowing down, especially in sales. Prices will also initiate a slower growth curve, although sustained demand should ensure that neither indicator experiences a decline. Therefore, domestic demand could experience a slight decline as Spanish households feel the impact of more expensive mortgage repayments.
However, international buyers will continue their love affair with homes on Spain's coasts. In particular, purchasing real estate in Spain can be an interesting option for a variety of reasons. Due to its favorable climate, attractive scenery, rich history, and vibrant culture, Spain has long been a favorite tourist and expatriate destination.
All in all, buying a property in such an environment cannot be a bad idea. However, the current economic situation is such that no investment is safe. Slightly higher interest rates cause higher costs, and it's not the best idea to buy when prices are at an all-time high. Despite this, predictions are that price growth is still expected; the only question is, until when?
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Reference List
● Eurostat