In Spain, the real estate euphoria continues

In Spain, the real estate euphoria continues

On a street in El Masnou, near Barcelona (Spain), June 13, 2022.

Inflation has not yet dampened the Spaniards’ appetite for stone. According to data published on August 5th by the National Institute of Statistics (INE), nearly 331,000 homes were sold in the first quarter of this year, the highest number since 2007. It comes after a record year: 565,523 homes sold in 2021 , an increase of 34.6% compared to 2020.

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The long recovery period that began the day after the property bubble burst in 2008, which plunged the country into a serious banking and financial crisis, seems to belong in the past. 2022 is very intense and the numbers are better than last year, says Maria Matos, Director of Research at real estate website Fotocasa. At this rate, we could pass 600,000 sales. »

“Slower”

The Spanish market already experienced a recovery at the end of 2010, in the context of strong economic growth. This dynamic was interrupted in 2020 by the health crisis, but the restart took place fairly quickly. “Since mid-2021, household savings, new orders for housing due to the shutdown, and lower interest rates have boosted sales,” Cristina Arias, of real estate portal Tensa, explains.

Higher sales were not matched by building starts: less than one in five sales between January and June correspond to new homes

What does the second half of 2022 look like? Everything seems to be slowing down.thinks Francisco Inaretta, of real estate website Idealista. “The rise in interest rates and the tightening of conditions for granting real estate loans may portend a slowdown in prices and sales volumes”, confirmed mI Come on. Inflation, which accelerated in Spain in July to 10.8% in one year, “It will begin to affect Spanish families and reduce their ability to save,” The analyst adds.

Another challenge for Spanish real estate: the lack of properties for sale. In contrast to the concrete craze that has gripped the peninsula fifteen years ago (the construction sector accounted for more than 10% of GDP in 2007), the rise in sales was not accompanied by new housing construction: less than one in five sales between January and June corresponded to new homes.

Danger of overheating

“The strong demand registered last year has reduced the number of old housing, and new building permits are progressing very slowly, due to lengthy administrative procedures and the high cost of materials and labor,” Mr. Inarita explains. This means that prices are slowly declining, especially in some cities such as Madrid and Malaga and in the archipelagos of the Canary and Balearic Islands. »

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