The price of new-build housing will continue its upward trend, rising by between 5% and 7% this year, even though the number of housing sales will experience a downward trend, adjusting by approximately 20% after a record year. According to data presented by Savills at the 'Living Trends - new ways of living' event, the forecasts still expect to reach the sales figures of the last five years' average levels of around 575,000 and 600,000 units.
Pelayo Barroso, national director of Savills Research, pointed out that new home prices are still increasing due to the high supply-demand imbalance.
Entry into the new housing market currently stands at 80,000 finished units per year in a market with sales estimated at 550,000 units and 600,000 units per year. Compared to previous periods, considering the population and household forecasts in Spain and reduced household size, development activity would need to double to reach a figure between 150,000 and 175,000 units completed per year.
In this context, combined with a downward trend in mortgage applications and an increase in the housing affordability ratio, which now stands at 36%, slightly above the optimal level of 33% of household income spent on mortgage payments, the demand for rental housing is growing.
However, the rental market's supply problem is also driving up prices. According to Savills data, around 5,000 new build-to-rent (BTR) developments were on the market in 2022. A further 8,000 units are expected for 2023 and 9,000 more in 2024. With these figures, most of the rental supply (95%) remains in the hands of private individuals or private investors, where 5% corresponds to institutional investors, who continue to see a structural need for affordable rental housing in Spain.
According to a Europe-wide Savills survey of investors with more than €1 billion in assets under management, 50% expect their portfolio to consist of 25% of their assets in the living sector, with interest in the multifamily and student residence segment.
Experts from companies such as Dazia Capital, Nuveen Real Estate and Culmia agreed that the new ways of living that have appeared in recent years, based on mobility, flexibility and the tenant experience, are changing the business model and doing so faster and faster.
The 'flex living' model offers a housing solution for those looking for new ways of living in well-connected areas, with ad hoc services and affordable prices, while the luxury segment and branded residences are becoming consolidated. Furthermore, the BTR model is looking for local managers to help optimise the return on investment by applying technology to property operations.
They also pointed out that there is currently not enough land to cover the demand for housing, both for sale and for rent, discussing the design, financing, promotion and management formulas for the future, designed to meet the needs of people at different times of their lives.