2023 finished strong for Spanish property
2023 was a game of two halves in terms of home sales in Spain. The first half of the year saw the cost of housing rise considerably. It even set a record year-on-year price increase in June at 10.8%, the largest increase over the last 17 years. This kind of increase was similar to the variations we saw in 2006 just before the real estate bubble of 2007/08. These increases were due to many factors including the change in the cycle of increasing interest rates, which caused a rebound effect in the market, accelerating the demand for housing.
Signs of moderation begans to show in the second half of the year with prices falling away from the double-digit increases of the previous months. By November, the year-on-year increase had dropped to 6.2%, the smallest increase of the year.
Average Price Rising
Despite this, the year still closed with a significant 7.4% annual increase, when compared to the previous year. This was the fourth highest since 2006 and not much different to the end of 2022 (+7.5%). The price of second-hand homes for sale ended the year at an average of €2,203 p/m², still 25% away from the record figures of 2007 (€2,952 p/m²). But the sidtance is narrowing due to a strong market and intense demand on a reduced supply. This general imbalance has produced increased prices in all the autonomous communities, except Extremadura.
The monetary institution of the Central Bank suggested in their year-end speech that the pause in the rate increase will continue in the coming months, and is responsible for the Euribor having closed December below 4%. Therefore, a situation occurs that once again stimulates purchasing demand and that is why possible falls in housing prices are becoming further and further away. Although it must be taken into account that the market is very heterogeneous. Starting in the second quarter of 2024, we could begin to see downward fluctuations in some autonomies with lower demand and less tourist attraction, due to the interannual comparison of high variations presented in 2023. Of course, it will be necessary to put into context that this is not a guarantee of price falls as such, since, after anomalous increases, the price will simply be returning to the starting place.
