Home sales will drop in 2023 but will continue at a high level, according to BBVA
Prices will go up 2%
Home sales will drop in 2023 but will continue at a high level, according to BBVA
The initiation of new promotions will stagnate and the price will fall by around 2.4%, according to the BBVA Real Estate Observatory for the second half of the year.
The sale of homes will suffer a slight contraction in 2023, despite which the level of transactions will continue to be high, while the initiation of new promotions will stagnate and the price will fall by around 2.4%, according to the Real Estate Observatory of the second semester of BBVA. Despite the fact that the economy will suffer a greater slowdown than expected a few months ago, the report indicates that the excess savings accumulated by households during the pandemic, 129,000 million, will help sustain consumption and investment.
It also indicates that the rate hike occurs in a context of lower financial burden on families than in the real estate crisis of 2008 and that the composition of the mortgage portfolio, with older loans and a higher proportion of fixed-rate loans, will reduce the impact of rising interest rates.
Faced with a foreseeable tightening of credit conditions, the entity believes that households could be advancing their home purchase decisions in recent months and that this would explain why, after the slowdown in May and June, purchases increased in July and August.
In the first eight months of 2022, the sale of homes registered a year-on-year increase of 12.7%, largely driven by foreign operations, especially in the Canary Islands, the Valencian Community and the Balearic Islands, where the bank considers that "some tension" in prices.
For their part, new construction housing permits increased by 0.2%, an advance that is once again much lower than that of sales that the report attributes to the uncertainty surrounding the regulation of the real estate market and the scarcity of land developed in areas of interest to buyers, together with the lack and increased cost of construction materials, which could be delaying some projects and, therefore, slowing down recovery.
The report also shows that, although the cost of some construction materials has begun to fall compared to the maximum of the first half, many of them remain at relatively high levels. In his opinion, the consolidation of the progressive reduction of bottlenecks and transport costs would help to consolidate this price reduction.
For its part, the salary data agreed in agreements suggest to BBVA experts a relative shortage of labor in the sector. It also recalls that the revision of the quarterly national accounts of the INE points to a downward revision of the recovery of investment in housing.
However, it underlines that, on the contrary, the new demographic projections of the INE point to greater optimism regarding the growth of the Spanish population in the coming years, to which the Government's promotion of hiring construction workers in the foreigner and "all this will mean a greater need for housing".
