A busy quarter is approaching for the real estate sector in Spain. In the run-up to summer, those looking to buy usually close their transactions. What will happen this summer? Experts give their forecasts for the next quarter in the Spanish real estate market.
Factors that will play a key role in the real estate market in Spain
There are actually several trends playing out. Jesús Duque, vice-president of Alfa Inmobiliaria, explains that when it comes to supply and demand, the main Spanish cities have a shortage of housing, which means that demand and prices will not fall and will even continue to rise.
Regarding the economic environment, the consensus is that the Spanish economyremains stable, despite high levels of unemployment. In 2023, GDP grew by 2.4%, and the forecast for 2024 is 1.6%. Mortgage rates, meanwhile, "peaked in October last year, and have since drifted downwards. So, as long as inflation remains contained, this trend should not change," the expert comments.
As a consequence, "we forecast that the fall in home sales will bottom out in the first half of this year".
Slight price increases
Toni Expósito, director of operations and development at Keller Williams, believes that once again, "we are in a situation of prices being at two different speeds". "Prices will be steady in towns and areas of high demand and investment, the 'ugly ducklings' that nobody wants will fall as much as necessary, and they will also drop in very depressed areas where unemployment, mortgage rates and inflation have had a greater impact".
For the expert, the large drop in the rental housing stock means that buying is cheaper than renting. This will help maintain the number of transactions also for the second quarter of the year.
The spokesperson for Alfa Inmobiliaria highlights stable prices in large cities with greater appeal and downward fluctuations in some communities with lower demand. "However, I think that prices will only rise or fall slightly".
Jesús Duque believes that prices could rise by an average of 1% or 2%, a figure lower than inflation, which is expected to remain above 3%. This would mean a drop in house prices in real terms. "However, always bearing in mind that Alfa Inmobiliaria specialises in second-hand properties. New-build housing could experience a higher price hike because there is a shortage of new builds and more modern construction standards, which would justify higher prices".
More foreign buyers in Spain in 2024
Another of the forecasts experts gave regarding house prices and transactions for the next quarter is that "the number of transactions will continue to rise slightly compared to last year, as they have already risen by 7% in January of this year," Expósito said.
This is due to the downward correction of bank interest rates after the Euribor reached highs of over 4%. "We are already experiencing a downward trend in February, closing at 3.67%".
The expert highlights that transactions by foreigners will continue to rise from 21.4% which was already established during the first half of 2023 (source: Notaries), "surpassing last year's quotas in the second quarter, which is usually a very good period for British, German and French buyers on the coast".
Moreover, they believe that opening up to American buyers will at least triple last year's 2% of all foreign buyers. "We at Keller Williams are receiving many more referrals from US colleagues to buy in Spain with Golden Visa in 2024".
One in three foreign home buyers in Spain finance their purchase
One in three foreign home buyers in Spain finance their purchase in our country, and two in three pay in cash. According to Engel & Völkers Finance Spain, the reason for this is that the mortgage offer is more competitive than what they can find in their home countries.