Property sector shows stabilisation with slight decline

The Spanish real estate market reflected a cooling in activity in the third quarter of the year, at a time when high financing costs and persistent inflation mark the general economic future. This is reflected in the III Solvia Market View 2023, which shows that the number of sales and purchases experienced a decrease between the months of July and September. For their part, prices experienced a slight adjustment compared to the previous three months, although they consolidated their upward trend on a year-on-year basis.

Between the months of July and September, a total of 140,160 operations were registered, which represents an annual drop of 16.5 % and 7.8% compared to the previous quarter. “The market continues to be under pressure in an environment of high interest rates, which, together with the impact of inflation, has made it difficult for many potential buyers to acquire a home,” says Ernesto Ferrer-Bonsoms, Real Estate Business Director of Solvia. However, compared to previous years, activity levels remain high and, according to Solvia estimates, this year will close slightly below 570,000 sales. Looking ahead to 2024, Ferrer-Bonsoms predicts that “it will continue to be a dynamic year in the number of real estate transactions, continuing the path of stabilisation begun during this year. Thus, there will only be a slight reduction in the number of operations of between 5% and 8% compared to 2023, partly caused by the lack of supply, but maintaining a very positive volume in global terms.

The current economic context is also reflected in the number of mortgages on registered homes, a total of 90,858, which represents a decrease of the 2.9% compared to the previous quarter, the fifth consecutive quarterly decrease. Likewise, the drop was more than 22% compared to the same period in 2022. Between July and September, the percentage of transactions carried out with mortgage financing of the total was 64.8% a>, compared to the 61.6% reached in the previous quarter, which was its lowest level since the first quarter of 2014.

At the provincial level, between the months of July and September, drops were recorded in the number of sales carried out in the vast majority of Spanish provinces. In fact, only fourteen of the total Spanish provinces experienced increases in operations and, among them, only three saw double-digit increases. Among the declines, seventeen saw falls of more than 10%. In this sense, Zamora was where the number of transactions fell the most, 22.7%, followed by Santa Cruz de Tenerife, where it fell 20.1%. The increases were led by Huesca and Álava, with increases of 19.7% and 18%, respectively.

As the III Solvia Market View 2023 shows, the price to purchase a home in the third quarter stood at €1,974/ m2. In this way, it decreased by 0.3% compared to the months of April and June, although it increased by 0.8% compared to the same 2022 period. This latest data confirms the forecast made by Solvia in previous reports, in which they stated that, towards the end of 2023, there would be a moderation in the advance of prices, in line with what is expected for next year. “The slight reduction in transactions that we are witnessing will not be reflected in the prices due to this lack of supply, which in 2024 will continue to remain stable with advances similar to those of this year, between 1.5% and 2.5%” continues Ernesto Ferrer-Bonsoms.

On the other hand, prices showed a different trend between July and September, depending on the type of housing, compared to the previous quarter. While the price of new housing experienced a decrease of 2.9%, falling below 2,150 €/m2, that of used housing increased by 0.5%, reaching 1,935 €/m2.

By autonomous communities, price variations in the third quarter continued to be very wide. While La Rioja, Cantabria and the Balearic Islands registered quarterly price increases of more than 5%, the Foral Community of Navarra experienced a decrease of close to 15%.

In the breakdown by province, up to 30 provinces experienced price increases in the third quarter. Among them, Teruel saw the largest increase, of almost 17%. The highest prices were in Gipuzkoa, the Balearic Islands and Madrid, where they exceeded €3,200/m2, while seven other provinces recorded prices of above €2,000/m2, led by Barcelona, ​​Bizkaia and Málaga. On the contrary, the province in which it cost the least to acquire a home on average in Spain was Ciudad Real, where prices do not reach €700/m2.

If we limit the scope to the main Spanish cities, in the third quarter Madrid consolidated its position as the second most expensive city, only surpassed by San Sebastián. Thus, the average price of housing in Madrid stood at €3,744/m2, compared to €3,665/m2 in Barcelona, ​​the third on the list.

According to Solvia’s analysis, the rental market continued to be stressed by a lack of supply and strong demand, which translated into an increase, although slight, in prices. In the third quarter of the year, the rental price reached €12/m2, which represents an increase of 0.8% compared to the previous three months and an increase of 6.2% compared to the same period last year.

The highest incomes between July and September were recorded in the province of Barcelona, ​​where they reached €17.5/month/m2. Furthermore, rents exceeded €16/month/m2 in the Balearic Islands and Madrid. On the other hand, the cheapest prices were in Ciudad Real, Zamora and Jaén, where they did not cost more than €6/month/m2.

The licences to build new homes in the third quarter were 25,554, 5.4% less than between April and June. The decrease was less pronounced, 1.4%, compared to the same quarter of 2022, a year that closed with more than 100,000 and represented a record number of licences not seen since 2009.

The provinces of Madrid, Seville, Barcelona, ​​Málaga, Alicante and Murcia together accumulated more than half of the new construction licences granted in the third quarter, specifically 53.3%, emerging as the most dynamic when it comes to starting constructions for residential use.

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