The housing market faces a year full of uncertainties and in which, if there are no surprises, there will be a slowdown in activity. Experts from the real estate firm Solvia believe that the scenario proposed by 2023, although it will continue to be positive, it will bring a moderation in the main parameters of the sector and some changes. Among them, the boost in variable mortgages, a drop in home sales and a greater contraction in the supply of rental properties.
These are the trends that, according to Solvia, will mark the real estate market in 2023:
Drop in home sales
The increases in interest rates applied by the European Central Bank (ECB) in 2022 (leaving the price of money at 2.5%, the highest level since 2008) and the next ones to come will cause it to continue “reducing the purchasing power and saving capacity of families, two determining factors for buying a home. Thus, and as reflected in the III Solvia Market View 2022, it is expected that the number of purchase and sale operations carried out in 2023 will experience a adjustment of between 10% and 15%”.
Slight rise in house prices
Housing became more expensive in 2022 and Solvia’s forecasts suggest that positive numbers will continue to be the general trend this year. Specifically, expect a price increase between 1.5% and 2.5% year-on-year“mainly motivated by the reduced leverage of the sector and the shortage of housing in large cities,” the report stresses.
The contracting of variable mortgages grows
One of the keys this year, according to the company, is that fixed mortgages, which in 2022 broke a record for contracting, will lose ground in the market compared to variable mortgages.
“After 2022 that began with a record demand for fixed-rate mortgages for homes, the latest data published by the INE indicate that this trend is reversing. Thus, the contracting of this typology in October it represented 66.8% of the market, the lowest figure since September 2021 (65.8%). This change of course will continue in the coming months and is mainly due to the strategy of banking entities to establish minimum prices for variable mortgages and toughen the conditions for fixed ones,” explains the report. Currently, according to data from idealista /mortgages, there are few fixed-rate mortgages with an interest rate of less than 3%, while there are offers of variable loans for home purchases from Euribor+0.50%.
Less rental offer and no replacement
“The increase in rental demand is coupled with an increasingly smaller supply. A trend that will continue in the coming months, also taking into account that the Government has announced that the 2% limit on the increase in income will be maintained throughout 2023. This is a measure that could cause certain owners are reluctant to give up their available homes for rent,” says Solvia.
And he adds that “this lack of supply, which according to many experts could experience falls of between 15 and 20%, together with the increase in interest in renting, will continue to put pressure on prices in the coming months.” In 2022, the stock of rental apartments has already fallen by an average of 17% in Spain, according to idealista data.
New construction could regain momentum
The report recalls that “the regulatory complexity of the different autonomous communities in the generation of land for development, the lack of qualified labor, the rise in the prices of raw materials or the risk of an economic recession due to increases in interest rates are some of the factors that are delaying the creation of new construction projects”. However, it stresses that “the strong existing demand for this type of asset and its attractiveness to investors could boost this sectorreaching in 2023 the levels of previous years”.
Investment in the tertiary sector will stabilize
“After a 2022 in which historical figures were reached, it is expected that investment in non-residential real estate, such as commercial floors or logistics warehousescontinue to grow in 2023. However, it will tend to stabilize due to the current economic uncertainty,” the study highlights.
Thanks to its high profitability and the great opportunity it represents for investors seeking stability, housing will remain in 2023 as a safe haven against inflationary rates. “These properties, together with replacement and foreign homes, will be the ones that sustain the market in the coming months,” the real estate firm points out.
Sustainability gains weight in the market
The real estate market continues to work to adapt to the new needs of consumers and their requirements when choosing a home. In this scenario, Solvia indicates, “the sustainability, energy efficiency or the use of environmentally friendly building materials and systems they are factors that increasingly influence when selecting a property”. In addition, they could gain an additional boost thanks to European funds to rehabilitate homes and buildings.
Bet on innovation
Another of the clearest trends observed by Solvia is the commitment to innovation. Throughout the year, the study explains, “real estate will continue to explore the possibilities offered by the metaverse, a world parallel to reality that, among other advantages, makes it possible to carry out transactions of physical assets thanks to the digital replica of the properties, in addition to being able to visit them virtually or reserve them through the “tokenization” of the contracts. This process allows homes to be digitized so that their version of the metaverse represents the value of the property in real life. It is also estimated a increase in the use of ‘Big Data’ by real estate companiessince this great storage model allows studies to be carried out with a high reliability rate, streamlining administrative processes, assessing market opportunities and establishing better conditions with customers”.
