Real Estate Market Forecast 2023
There are less than two weeks left to start the new year, so from Inmoself we want to share our real estate market forecast for 2023.
Taking into account the entire European economic panorama, the price of electricity and gas and the war in Ukraine, we have been able to see a downward trend in real estate prices in addition to the decrease in purchasing power.
Let's review a little more in depth the trend that currently exists in the residential sector.
The notable increase in foreign demand. In March, 10% of the purchases made were from foreign clients, but at the end of the year it is 15%. So we anticipate that by early 2023 it could even reach 20%.
Mortgages are increasing the average period of duration. This indicates once again that the solvency of the Spanish population is declining as there is a greater need to reduce expenses.
The purchase of new construction is going down but the purchase of second-hand is going up. Here again we go to the problems with solvency.
The rental market has continued to raise prices as an alternative to buying.
The continued rise in interest rates that is still expected suggests data for the 4th closing quarter confirming an average drop of 8-10% in housing prices, as has already happened in the United States.
The big service holders are getting rid of their packages and this trend will continue
If we analyze the first point (the increase in foreign demand) the most probable causes are the fall of the euro against the dollar, the fact that teleworking is spreading more and more and the good Spanish climate.
In the fourth point we can understand from another point of view what is happening in the Spanish market. Due to the increase in rental prices and the difficulty of having solvency, it has caused 46% of young people aged 25-25 to be unable to access housing, forcing them to live with their parents.
On the other hand, our team has carried out an in-depth investigation by speaking with other professionals in the real estate sector between September and November. They confirmed our suspicions, the slowdown trend, general concern of professionals and a decrease in contacts and requests for visits through the portals.
If we carefully observe the statistics we can observe several things: the REAL value of the properties discounting inflation at the end of the quarter September 30 is NEGATIVE, the price has had a slight average decrease in residential of 0.1 - 0.2 according to the property registry , and with very high inflation data it is a loss of value of 3-4% quarterly.
In conclusion, our forecast is a drop in purchase prices in 2023 that will balance the sector, facilitating the purchase, causing the rental market to relax slightly. It will also be easier for young people to access decent housing. When the energy price bonuses run out, inflation will kick in again.
Another thing to take into account are the purchase and sale operations with foreigners, we foresee that it will rise more, so Spain will continue to have movement in the purchase and sale thanks to this demand.
On the other hand, we believe that at the mortgage level interest rates will continue to rise to 3.5% in mid-2023, it is better to speed up the fixed-rate mortgage.
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