The housing market is gearing up for increased demand and further price rises. Recently, as the market anticipates interest rate cuts, various forecasts are being updated, including one from the real estate services firm Solvia.
According to its latest study, property sales are expected to decline this year but rise next year, with prices projected to increase by approximately 3% in both 2024 and 2025. The report also anticipates a rise in new building permits and rental activity.
Solvia’s report highlights that, in Q2 2024, Spain's real estate market experienced a decline in the number of transactions and new mortgage contracts, alongside a slight increase in purchase prices and a significant rise in rental costs. This trend is expected to persist for the remainder of the year.
The forecasts suggest a year-on-year decline in transactions of between 4% and 5% by 2024. However, Solvia anticipates a rebound in demand in 2025, projecting a growth in sales and purchases of between 2% and 3%.
Regarding mortgages, Solvia notes that "if interest rates continue to fall, a more accessible credit environment could be created, attracting new customers." Nevertheless, the report emphasises that "supply remains very limited and is gradually decreasing," indicating that the year may conclude with a slight reduction in new mortgage contracts.
The platform forecasts a moderate yet steady increase in property prices. It anticipates that 2024 will end with an average rise of 3%, a trend expected to continue into the following year. The report highlights that average prices surpassed €2,000/m² in Q2, with the Balearic Islands, Guipúzcoa, and Madrid leading the market, all exceeding €3,000/m².
Juan Ramón Prieto, Director of Operations at Solvia, states, "The persistent lack of properties continues to put pressure on the market, and combined with constant demand, will sustain this upward trend." Major valuation agencies and economists also project a rise in house prices in the coming months.
Regarding the rental market, the forecast indicates an average rent increase of over 10% this year, driven by high demand and limited supply, exacerbated by price caps. According to idealista, rental prices in Spain reached €13 per square metre per month at the end of Q3, reflecting a year-on-year increase of 10.2%.
Juan Ramón Prieto adds, "Rental prices are expected to continue rising in the latter part of 2024, with a year-on-year increase exceeding 10%. This surge is largely attributed to the ongoing shortage of available properties and escalating demand. Additionally, price caps in high-pressure areas are pushing many owners to shift their properties to the tourism sector in pursuit of higher returns, further intensifying the market."
Solvia’s forecasts also anticipate an increase in new building permits of between 6% and 8% by year-end. According to the latest data from the Ministry of Housing and Urban Agenda (MIVAU), there were year-on-year increases of 27% from January to July, resulting in over 75,800 units. Notably, in July alone, more than 12,500 permits were granted – the highest number since late 2008.
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