House prices moderated in Melilla in the third quarter of this year, according to the latest data released by National Institute of Statistics (INE).
From July to September 2022 Apartment prices increased by 7.3%, remaining one tenth below the national average (7.4%). They also fell short of the 8.7% increase recorded from April to June this year.
In any case, it should be clarified that the moderation of what you pay for a house in Melilla it keeps prices 1.2% higher than what a city home cost last year.
This is not a particular problem of Melilla. House prices show positive quarterly rates in the third quarter in all autonomous communities.
The largest increases occurred in the Comunidad de Madrid, with a rate of 2.3%, and in País Vasco and La Rioja, with an increase of 2.2% in both.
For their part, the Communities in which the annual rate increased the least were Principado de Asturias, Región de Murcia and Galicia, with an increase of six tenths in the first two and seven tenths in the last.
The increase in interest rates is significant
This moderation of the local real estate market is influenced by the historic increase of 0.75 points that the European Central Bank applied to the interest rates governing mortgages in Spain up to leaving them at 1.25% in September.
This was followed by another 0.75% hike in October, which left rates at 2%, the highest figure since 2009.
Similarly, in November the Euribor, which regulates variable mortgages, closed at 2.8% and banks expect it to continue rising to 3% in 2023.
Rising interest rates make credit more expensive and thus cool the housing market. This helps control inflation, but does not reduce prices.
Political instability also plays a role.
To the rise in interest rates and the Euribor, we must add the instability that Melilla is experiencing, where the Moroccan threat and the increase in unemployment have also made themselves felt in the real estate market. There are more and more apartments for sale in the city.
Laila has a permanent job and has lived in Melilla for two years and although she would like to buy a house, she resists seeing what happens after the municipal elections in May and the political elections in December. He is concerned about the threat from Morocco and the small mouth with the Spanish government faces hybrid threats against the autonomous cities.
“I don’t want to buy right now. I’m afraid something will happen and I will pay off a mortgage of 250,000 euros over the next 25 years without being able to live at home,” she told this newspaper.
In the same situation is Sara, a civil servant who intends to stay in Melilla for at least ten years, but has decided to rent for fear of investing in a mortgage and losing her property in the city. “They say that Morocco has always been talked about in Melilla, but it has never been talked about as much as now. I think it is not prudent to buy at the moment. Buyers need legal certainty because houses in Melilla are very expensive It would be better for me a mortgage is cheaper than rent, but I dare not take the step,” he said in statements to El Faro.
