What will happen to property prices in Spain during the summer?
Spain, like much of Europe, is going through uncertain times right now, with high inflation rates leading to cost of living crises, the fallout from the pandemic and the implications of the war in Ukraine. But what does all this mean for the housing market?
Everything over the last couple of years has risen in price, from utility bills and food to mortgage repayments and travel, but have house prices been affected in the same way and what will happen to property prices this summer in Spain?
If you’re thinking of buying a house in Spain in the near future, you’ll have to factor in a lot of considerations, including predictions about what the housing market will do over the summer. Should you wait to buy in case prices fall significantly, should you decide quickly in case they skyrocket or will they stay relatively stable?
While the market can be difficult to predict in uncertain economic times, the experts do have some general forecasts for the Spanish property market this summer.
READ ALSO - Spain’s new housing law enters into force: Five key points you should know
Miguel Cardoso, chief economist for Spain at BBVA Research predicts drops in both sales and prices, although not at the same intensity. He believes there will be a sharp contraction in sales, but not in prices.
The research team forecast that the price of property will fall by less than four percent across the country as a whole, staying close to the "long-term equilibrium level”.
In the case of sales, however, they anticipate a year-on-year decrease of close to 30 percent, mainly concentrated within the second-hand residential market.
Economist Gonzalo Bernardos from the University of Barcelona has a slightly more positive outlook and also believes we will see housing costs fall this summer.
He predicts that the escalation of prices in variable mortgages "will greatly discourage investors", which will translate into a drop in property prices.
He also believes that Spain’s new Housing Law, as well as other measures, such as the granting of the youth rental voucher (to help young people afford rent), should help to alleviate the difficult situation that the real estate market is going through.
But, not everyone has predicted the same, however. At the end of May, the Bank of Spain announced that they expect house prices to grow between 0 and six percent in the coming quarters.
With differing opinions between experts, it can be difficult to know what to do, however, all seem to be in agreement that whether house prices fall or rise, it won’t be by much, and the market remains relatively stable.
READ ALSO: Property prices in Spain's coastal areas continue to rise due to demand for second homes
Prices vary between regions
A monthly index released by property experts TINSA has revealed that property prices in Spain in May rose month-on-month by an average of 0.3 percent compared to April, and are 4.8 percent more expensive year-on-year overall.
The range of price rises, however, depends hugely on where in the country the property is located. Spain's islands and coastal areas, particularly the Mediterranean coast, were where house prices increased the most in the last month, while prices in inland Spain actually fell slightly.
According to Tinsa's data, property is currently 4.8 percent more expensive than in May 2022, a slight decrease on year-on-year increases of more than 7 percent recorded throughout much of the second half of 2022.
What about mortgages?
What may affect your decision in addition to price, however, are mortgage repayments. Variable mortgages have skyrocketed in Spain over the last year and many are struggling to pay monthly bills.
The rise of the Euribor rate, caused variable mortgages in Spain to increase by around €300 per month.
BBVA's Cardoso says that the increases in interest rates being carried out by the European Central Bank (ECB) to try to stop the escalation of inflation "are already having an impact on demand."
Despite this, BBVA estimates that just over half a million homes will be sold throughout the year, in line with the figures recorded in 2019.
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Everything over the last couple of years has risen in price, from utility bills and food to mortgage repayments and travel, but have house prices been affected in the same way and what will happen to property prices this summer in Spain?
If you’re thinking of buying a house in Spain in the near future, you’ll have to factor in a lot of considerations, including predictions about what the housing market will do over the summer. Should you wait to buy in case prices fall significantly, should you decide quickly in case they skyrocket or will they stay relatively stable?
While the market can be difficult to predict in uncertain economic times, the experts do have some general forecasts for the Spanish property market this summer.
READ ALSO - Spain’s new housing law enters into force: Five key points you should know
Miguel Cardoso, chief economist for Spain at BBVA Research predicts drops in both sales and prices, although not at the same intensity. He believes there will be a sharp contraction in sales, but not in prices.
The research team forecast that the price of property will fall by less than four percent across the country as a whole, staying close to the "long-term equilibrium level”.
In the case of sales, however, they anticipate a year-on-year decrease of close to 30 percent, mainly concentrated within the second-hand residential market.
Economist Gonzalo Bernardos from the University of Barcelona has a slightly more positive outlook and also believes we will see housing costs fall this summer.
He predicts that the escalation of prices in variable mortgages "will greatly discourage investors", which will translate into a drop in property prices.
He also believes that Spain’s new Housing Law, as well as other measures, such as the granting of the youth rental voucher (to help young people afford rent), should help to alleviate the difficult situation that the real estate market is going through.
But, not everyone has predicted the same, however. At the end of May, the Bank of Spain announced that they expect house prices to grow between 0 and six percent in the coming quarters.
With differing opinions between experts, it can be difficult to know what to do, however, all seem to be in agreement that whether house prices fall or rise, it won’t be by much, and the market remains relatively stable.
READ ALSO: Property prices in Spain's coastal areas continue to rise due to demand for second homes
Prices vary between regions
A monthly index released by property experts TINSA has revealed that property prices in Spain in May rose month-on-month by an average of 0.3 percent compared to April, and are 4.8 percent more expensive year-on-year overall.
The range of price rises, however, depends hugely on where in the country the property is located. Spain's islands and coastal areas, particularly the Mediterranean coast, were where house prices increased the most in the last month, while prices in inland Spain actually fell slightly.
According to Tinsa's data, property is currently 4.8 percent more expensive than in May 2022, a slight decrease on year-on-year increases of more than 7 percent recorded throughout much of the second half of 2022.
What about mortgages?
What may affect your decision in addition to price, however, are mortgage repayments. Variable mortgages have skyrocketed in Spain over the last year and many are struggling to pay monthly bills.
The rise of the Euribor rate, caused variable mortgages in Spain to increase by around €300 per month.
BBVA's Cardoso says that the increases in interest rates being carried out by the European Central Bank (ECB) to try to stop the escalation of inflation "are already having an impact on demand."
Despite this, BBVA estimates that just over half a million homes will be sold throughout the year, in line with the figures recorded in 2019.
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