MADRID – The instability due to the economic crisis is leaving its mark on the real estate market in Spain. This results in an expected decline in home sales of approximately 15% this year. However, prices will remain stable for the time being.
This is reported by the well-known Spanish economist Gonzalo Bernardos. The professor from the University of Barcelona (UB) took part in a session of the General Council of the Official Associations of Real Estate Agents of Spain. He emphasised that the stricter financing conditions and the successive interest rate increases by the European Central Bank will cause a further decline in real estate sales of 10% in 2024, with a price drop of around 3%.
Mortgages and market conditions
Bernardos explained that the recession in the real estate market in Spain is partly because citizens can pay less. This is despite growth in tourism and a stable economy. The provision of mortgages has become stricter: no longer 100% mortgages, but a maximum of 80% of the home value. This leads to a decline in loans and domestic demand, with the number of foreign buyers increasing, especially in cities such as Barcelona and Madrid.
Bernardos predicts an improvement in 2024 due to expected interest rate cuts from the ECB and the US Federal Reserve.
Middle class ‘strangled’
Yet he warns that in big cities the middle class is being ‘strangled’ with asking prices of €350,000 for a 50 m² apartment, prices that were previously only for luxury homes.
Criticism of government measures
According to Bernardos, the government’s measures to increase the housing supply, mainly intended to attract young voters, will not have the desired effect. Supply remains scarce, which maintains the imbalance between supply and demand, and therefore high prices.