Those planning to buy a property in Spain this year or next can expect further price increases. CaixaBank warns that housing prices will continue rising this year and next.
In 2024, they will rise by 3.5% and by 2.5% in 2025. This follows a year in which prices have already increased by 4.3%, according to the bank.
Decrease in the number of property purchases
The bank’s economists predict a decrease in the number of property purchases to 550,000 in 2024, after closing 2023 with 592,000 transactions. Judit Montoriol, senior economist at CaixaBank Research, notes that 2023 ended with a 10% decrease in the number of transactions compared to 2022. This trend is even stronger for second-hand homes, with a decrease of 10.4%. Nevertheless, the number of transactions will show a 17% increase compared to pre-pandemic levels. A strong labour market, immigration flows, and a mismatch between supply and demand are underlying factors.
Decrease in mortgage applications
Despite the positive economic developments in the country, CaixaBank expects the number of mortgage applications to decrease by 20% in 2023. Additionally, 65% of the transactions were financed with a loan – a lower percentage than in 2022. This is attributed to an increase in buyers who do not need financing. There is also a significant contribution from foreign buyers, who have purchased 90,000 homes in the past year.
Forecasts and price increases
CaixaBank has revised its forecasts for property sales: from 550,000 to 592,000 in 2023, from 510,000 to 550,000 in 2024, and from 511,000 to 552,000 in 2025. Regarding price increases, the bank expects an increase of 4.3% in 2023 (initially 3.3%), 3.5% in 2024 (initially 1.4%), and 2.5% in 2025 (initially 2.2%), based on statistics from the Ministry of Housing.
Regional differences and new construction
The increase in housing prices is particularly noticeable in regions with a growing population, such as the Balearic Islands, Málaga, Santa Cruz de Tenerife, Madrid, and Valencia. This leads to a greater gap between urban and rural areas, and between tourist and non-tourist zones. Regarding new building permits, CaixaBank expects an increase from 110,000 in 2023 to 125,000 in 2025.
Economic growth and future expectations
CaixaBank states that the Spanish economy experienced higher GDP growth in 2023 than expected. This has led to a revision of growth forecasts for 2024. However, Montoriol emphasises that future economic developments will depend on geopolitical factors, inflation declines in the eurozone, and possible interest rate cuts by the European Central Bank (ECB) before the summer of 2024.
