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What does 2023 hold in store for the housing market?
Monday, December 5, 2022 @ 5:32 PM

RISING energy costs, price-led inflation and increasing Eurozone interest rates have led experts to speculate on what could happen in Spain's housing market in 2023 – and their views offer a range of differing scenarios.

They include a reduction in the number of property purchases, a small rise in home values, and growing interest in renting instead of owner-occupancy.

Spain has one of Europe's highest rates of home ownership – approximately three-quarters of occupied residential property is lived in by those who have bought or inherited it, with or without a mortgage – meaning the rental market has tended to be largely seasonal, although younger adults finding it increasingly hard to get onto the housing ladder are becoming the largest tenancy market, especially with the difficulty they find in obtaining affordable rent prices in big cities.

Over two-thirds of homes in Spain are flats or apartments, even in villages, as development has historically sought to maximise land space.

Flats and apartments tend to be very generous in size, and are frequently much larger than a house with the same number of bedrooms.


Fewer sales, but small home price rises and 'strong latent demand'

Some property market analysts predict an approximate 12% shrinking in buying and selling next year, largely due to the first rise in the Euribor, or Eurozone interest rate, in many years.

This summer, for the first time since February 2016, the Euribor rose above zero, meaning mortgages are more expensive at the end of 2022 than they were at the same time last year.

The greater cost of mortgage repayments, combined with reducing household spending power as a result of consumer and energy prices going up, are predicted to lead to some reduction in homebuying.

But the same analysts believe there will be 'no major falls in home values', due to a 'very strong, latent demand' for buying.

In fact, they forecast rises in home prices of around 5% in 2023.

Demand will still exist, but potential buyers are more likely to postpone their decisions and keep their eye on the news – whether the conflict in Ukraine continues to affect energy prices and the direct effect of this on the cost of consumer goods, whether they are likely to get a pay rise as companies across Spain attempt to soften the blow of inflation for their employees, and whether the European Central Bank (BCE) will consider this inflation to be safely contained and therefore minimise interest rate rises.

The market is likely to adapt to encompass other formats of acquiring a home – renting with the option to buy being one of these.


BBVA and ING – more cautious about price growth

BBVA Research, the analyst arm of the high-street bank, forecasts a 'minor shrinking' in home sales for the coming year, but assures that actual levels of property selling will 'continue to be high' – just not as high as in 2022.



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