The housing market is heading into a new cycle of growth with purchase and sale operations at levels of boom and with the price constantly escalating, with increases of up to 10% expected by 2025.
Specifically, home sales soared by 51.3% year-on-year in October and accumulated a total of 69,418 transactions. This is the largest increase since August 2021 and its highest number of transactions since May 2007, when more than 75,000 operations were exceeded.
The October data from the National Institute of Statistics (INE) confirm that the sale and purchase of homes is chaining four months of year-on-year increases after in July and August it rose by 19% and 0.9%, respectively, and in September it shot up by 41%.
The sale of new homes increased by 83.4% year-on-year with 16,224 operations (its highest increase since May 2021 and its highest figure since February 2013) and second-hand housing operations increased by 43.6%, an increase not seen since September 2021 with a total of 53,194 transactions, highest since the beginning of the series in 2007.
“These large variations indicate the beginning of a new boom in the purchase and sale of housing. After the change in the mortgage cycle driven by the de-escalation of interest rates, a season of dynamism in home acquisition begins, in which factors such as optimism and buyer confidence in the market, added to an increase in the household savings rate and the more attractive mortgage conditions with a lower Euribor, will increase home purchases in 2024 and 2025,” explains María Matos, Director of Studies at Fotocasa.
This increase in sales in a context of low housing production puts upward pressure on prices, both for second-hand housing and new construction. According to experts, housing prices will continue to rise in 2025 due to the existing distortion between supply and demand. Thus, this situation will translate into a price increase that experts place in a range of between 4% and 10%. The most conservative forecasts are signed by CaixaBank and Bankinter, which project a nominal increase in the value of houses of 4.1% and 4%respectively, above inflation.
This increase is supported by improved economic prospects, a strong labor market and lower interest ratess that the European Central Bank (ECB) began to implement last July.
In this context, the Catalan entity does not rule out that the price increase will be greater than predicted. “It should be noted that the expansive situation of the real estate market and the good performance of the Spanish economy mean that the risks of an increase in housing prices faster than expected in our central scenario are not negligible,” explains the Market report. Spanish real estate 2024-2025: in expansive mode.
Precisely, BBVA Research projects a higher price increase. “The advance will be between 5.5% and 6.0% in both 2024 and 2025greater in the cities where the imbalances are more pressing”, states the Spain Situation report published in October. The forecasts of the idealista real estate portal walk along the same line, which predicts a 10% increase in prices at the end of this year, a trend that is will continue for next year and will force families to allocate a higher percentage of their income to paying for housing, exceeding in more and more places the recommendation of not exceeding a third of income.
Of all the forecasts, the one that yields the highest figures is the one prepared by the University of Barcelona (UB) and Forcadell, which places the price increase for next year at 10%. Potential owners will have to make a greater financial effort if they aspire to buy a new construction home, which could become 15% more expensive in some locations.
No bubble risk
For its part, the latest Solvia study on the real estate sector foresees an increase of between 5% and 7% in housing prices at the end of the year – which represents a slight increase compared to the previous forecast – and a trend that would moderate slightly in 2025, with a growth of between 4% and 5%. According to this analysis, between July and September, the average value of residential properties stood at 2,114 euros per m2, which represents an increase of 2.8% compared to the previous quarter and an increase of 7.1% compared to the same period in 2023, thus reflecting a continuous upward trend in property prices.
In the segment of new constructions, an interannual growth of 4.9% was observed, reaching an average price of 2,254 euros per m2while compared to the previous quarter, the advance was smaller, 1.1%. On the other hand, the cost of used properties stood at 2,080 euros per m2, with a quarterly increase of 3.3% and an increase of 7.5% compared to the same period of the previous year.
“The real estate sector is showing great dynamism and demand continues to be very solid. However, the supply is being reduced to a minimum due to the low production of new construction housing and the reduction of the existing product, which is leading to an inevitable tightening of prices that, in line with the affirmation of organizations such as the Bank of Spain, in no case will it translate into a real estate bubble,” explains Juan Ramón Prieto, Director of Operations at Solvia.
However, according to the manager, the key is to know the time horizon in which this trend will continue, which will fundamentally depend on the housing stock and the evolution of the economy, as well as the first fruits of the collaboration between all the actors. of the public and private sectors to build a more accessible market.
Rental market
The difficulty of accessing the purchase and sale market due to the impossibility of saving the money necessary to buy an apartment is also putting pressure on the rental market, which is, generally, the first step after the emancipation of the family home and the step prior to the trading. So, There are many young people who remain stuck in this market for years And that, added to the constant incorporation of new population into this sector, causes prices to skyrocket, with a supply that is increasingly contained.
The Rental Barometer, prepared by the Rental Observatory of the Safe Rental Foundation and the Rey Juan Carlos University, draws a worrying panorama, since the supply of rental homes in the third quarter of 2024 fell by 27,732 properties compared to the quarter previous, up to 734,622 rentals offered.
This is a figure that is mainly impacted by the province of Barcelona, which is experiencing the most critical situation with a loss of 9,284 homes in just three months. This situation is related, according to experts, to price control policies and the declaration of stressed areas in Catalonia. If we look back and take into account the drop in supply since 2023, Spain has lost almost 80,000 properties, of which 28,700 are located in Barcelona. With this panorama, the sector expects prices to continue rising.
According to the Solvia report, predictably, Rental prices will register an increase of more than 10% at the end of this year“due to the persistent lack of supply and sustained demand.” In addition, many owners are transferring their properties to tourist rentals, which further reduces the availability of housing for residential rental and intensifies the pressure on prices.
So, The long-term rental offer has lost prominence. According to the latest Esade report, in Barcelona 36% of active rental offers correspond to seasonal rentals, compared to 23% in Madrid. Likewise, the report reflects the strength of room rentals, “more frequent and intense in Barcelona”, and another key: the shortage of rental housing supply especially affects neighborhoods with lower income. Which are also those where the rooms take more prominence.
One stop shop
The transfer of apartments from traditional rentals to tourist or seasonal rentals due to the entry into force of the housing law is such that the Government is finalizing regulations to regulate temporary rentals. Thus, the creation of a single digital rental window is planned with the ultimate objective of “defeating legal fraud and those who abuse seasonal rentals to deprive people who need a regular rental”, they have repeatedly pointed out from the Ministry of Housing and Urban Agenda.
Specifically, work is being done to create a system by which which any short-term rental of a home must register and obtain an identification number, Without which the home cannot be advertised on digital platforms. Furthermore, in the case of seasonal rental, the causality of the contract will be requested at the signing of the contract. That is, the use of a temporary apartment will have to be justified and accredited.operations.
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