The gap between demand and supply is a key factor that marked the real estate market in Spain during 2023. This is likely to continue in these first months of the year, just as there is a difference between new and used housing. According to the experts consulted, new housing transactions will remain stable at the start of the year but used housing will be reduced due to inflation, interest rates and the current war conflicts, creating investment insecurity for buyers.
New home sales could maintain a positive trajectory in the first quarter of 2024, supported by sustained demand and probably driven by factors such as favourable interest rates, government stimulus policies and a more robust labour market. This is how Francisco Sierra, Casavo's managing director for southern Europe, sees it. "However, it is important to consider possible variables that could influence this forecast, such as changes in national economic conditions or global events that impact financial stability."
Miguel Ángel Gómez Huecas, president of the real estate associations FADEI and AMADEI, believes that new property transactions will remain stable, "the stock will be reduced at the same rate as there is a lot of demand and little supply".
Mercedes Blanco, Senior Managing Partner of Fincas Blanco and member of the legal advisory committee of the Official Association of Real Estate Agents (COAPI) of Catalonia, also gives her opinion on new-build sales, "We are at a time when sales are slowing down because clients are currently thinking more about buying. Normally, new-build homes are bought by those who can save and later finance, or because they come from selling a previous property".
The expert comments that there are repercussions on new-build sales when this process slows down or there are doubts about the property's sale price. "Currently, as there is no supply, used properties continue being sold because there is a shortage of new builds, so there is an excess of demand compared to the purchase options".
As for second-hand house purchases, Miguel Ángel Gómez Huecas believes they will fall as inflation, interest rates, and the current conflicts create investment insecurity for buyers, "and the banks are making it increasingly difficult to get a mortgage".
In the second-hand housing market, prices are regulated in certain areas, based on the product type and, above all, based on the prospective buyers, "but this is not happening in the general market, and the same is true for purchases," says Mercedes Blanco. " It is different in big cities or on the coast because there is still a strong demand from foreign buyers looking for high-standing products with exclusivity". This is why the expert believes that potential buyers are not expecting lower prices. "In second-hand housing, the pace of sales and purchases will continue to evolve, but only in certain areas and for very specific products".
Casavo's Francisco Sierra expects used housing to remain a key part of the real estate market. "Despite a more moderate growth observed in the first quarter of 2023, which could reflect a possible stabilisation in demand or available supply, it is important to note there is currently a reduced stock of homes on sale accompanied by lower demand".
While this supply decrease could influence price stabilisation, the expert believes the lack of supply also contributes to continued strong prices. In short, "we could expect fewer transactions, but with stabilised prices due to the market's supply shortage".
Will house prices continue to rise in 2024?
The president of the real estate associations FADEI and AMADEI believes that new builds will rise in a linear fashion throughout Spain, "hopefully not more than 5%". However, the second-hand market is different, "we will see rises of between 1% and 3% a year, but there will be strained areas where prices will have to be lowered to find buyers because they will have more difficulty in obtaining a mortgage and will have to lower their purchase price".