Else Beekman
In Spain, rising property prices have not deterred eager buyers, with 2024 set to close as one of the best years for the housing market since the pre-crash boom of 2007. Experts predict nearly 560,000 home sales by year’s end, indicating strong demand and renewed market energy.
The latest data shows that housing transactions in August increased by 0.9% compared to the same month in 2023. Herewith, reaching 49,453 sales, according to Spain’s National Statistics Institute (INE).
Interest rate cuts fuel buying and mortgage activity
The European Central Bank’s recent interest rate cuts, initiated in June, have been a catalyst in Spain’s housing market. These factors spurred both home purchases and mortgage applications. This shift was noticeable in July, which saw a 19% jump in home sales year-on-year. A trend that continued through August, albeit at a slower pace. Despite August being a vacation month, the number of transactions remained high, reflecting steady demand.
The INE data highlights that new builds are driving much of the growth. These represent 20.1% of all transactions and showing a 7.6% increase from last year. Meanwhile, sales of second-hand homes slipped by 0.7%, pointing to a market preference for new properties.
Mortgage growth reflects buyer confidence
August also marked an 8.8% year-on-year rise in mortgage agreements, totalling 30,676 new loans. July had shown even greater growth, with a 23.5% increase, as banks lowered interest rates to attract borrowers. The average loan amount in August increased by 5.3%, reaching €145,352, with a total lending volume of €4.46 billion.
María Matos, spokesperson for property portal Fotocasa, attributes the boom to an attractive financing environment and rising consumer confidence. She estimates that around 19% of potential buyers who paused their plans during the previous high-interest phase may now re-enter the market. The same for 21% who were waiting for rates to fall. “We could see up to 30% more buyers in the coming months,” Matos notes. Herewith, underscoring a period of heightened buyer interest.
A return to peak sales levels
Analysts anticipate that this wave of renewed interest, combined with banks’ ongoing rate cuts and competitive mortgage offers, will drive strong sales through the year’s end. Matos predicts that 2024 could become one of the highest-performing years for property transactions since 2007. The General Council of Official Associations of Real Estate Agents agrees, observing that when the market temporarily cools, demand tends to build up, ready to surge when conditions improve.