Have you decided to buy a property in Spain in 2023? 🙂
Knowing the trends in the Spanish real estate market for this year will help you understand what you should consider, what’s happening, and whether it’s a good time to invest. We’ll tell you all the details in this post. The year 2022 was marked by the strong performance of the real estate market. In fact, according to data from the INE (National Institute of Statistics), the sale of homes grew by 14.7% year-on-year in 2022, reaching 649,494 transactions, the highest figure since 2007. Additionally, 2022 was the year when foreigners bought more properties in Spain than ever before, with 88,800 purchases, representing a 45% increase compared to the previous year, according to data from the Property Registrars. The question is: what will happen in the sector in 2023?
Prominent trends in the Spanish real estate sector 🇪🇦 in 2023
In 2022, we already started seeing some trends that will continue during this year, and alongside them, other trends will emerge that could shape the direction of the Spanish real estate market. Let’s take a look at them below.
Reduction in the number of property transactions ⬇️
The increase in interest rates, which we will analyze in the following section, will lead to a decrease in the number of property transactions. According to experts, in 2023, the number of transactions is expected to be around 500,000 units, remaining above the historical average of 450,000 units.
Increase in interest rates ⬆️
If you are planning to buy a property in Spain and require financing, you may already be aware that interest rates have been increasing since last year. As of March 22nd, the interest rates have been set at 3.5%. The changes in interest rates have led to a higher demand for fixed-rate mortgages, which reached their peak in the third quarter of 2022 (69%), according to data from the Property Registrars. However, the trend is shifting, and there is a growing number of variable or mixed-rate mortgages being contracted.
Housing price adjustment 💰
The big question is: What will happen to housing prices in 2023? In 2022, housing prices in Spain increased by 7.4% according to data from the INE, although they contracted by 0.8% in the third and fourth quarters of the year. In 2023, a stabilization of prices is expected, with not as significant an increase as in 2022. Experts estimate that there may be year-on-year increases of between 1.5% and 2.5% in 2023. However, inflation is influencing the construction of housing due to the rise in the price of raw materials and energy.
Shortage of new construction housing 🧱
New construction housing continues to experience price increases. For example, in Madrid, the average price of new construction housing, according to the Society of Appraisers, is 4,125 euros per square meter, surpassed by Barcelona with 4,917 euros per square meter. The increase in interest rates during 2023 may lead to a reduction in demand compared to 2022, potentially resulting in fewer transactions for new construction housing. Additionally, the supply could also decrease due to the aforementioned increase in the prices of raw materials and energy.
Reduction in the supply of rental apartments 🔑
Rental prices have been increasing for some time now. This increase is due to several factors: high demand and a shortage of supply. Many people want to live in the city center, and landlords, fearing non-payment, are withdrawing their properties from the rental market. The latest price report from idealista shows that in January, rental prices in Spain increased by 1.5% and reached 11.6 euros per square meter, which is a historical high according to idealista’s data.
In conclusion, if you’re considering buying a property in Spain, it’s important to understand the Spanish residential real estate sector and its main trends. In any case, it is recommended to seek advice from expert real estate lawyers who can guide you through all the necessary procedures and help you make the best investment decisions in real estate.
