Solvia forecasts that house prices will maintain their upward trend in 2023, although with a moderation trend that will lead to ending the year with rises of between 1.5% and 2.5%, according to the conclusions of the IV Solvia Market View 2022, published this Monday by the real estate services company.
The behavior of prices throughout this year will follow the line observed since the fourth quarter of last year, when housing recorded its first quarterly decline after two years of rise.
Solvia recalls in its report that house prices contracted by 0.4% between October and December 2022, compared to the three previous months. However, compared to the fourth quarter of 2021, prices rebounded 5.3%. The prices of the used housing accompanied the quarterly fall and contracted by 1.1% in the fourth quarter compared to the third, while, on the contrary, the prices of the new construction increased by 2.5% in the same period.
Solvia also finds in its report differences by autonomous community and notes that it continues to run in these markets, both up and down.
Solvia’s business director, Ernesto Ferrer-Bonsoms, believes that 2022 was “very positive” for the real estate market and predicts a “stabilization” in 2023.
“The real estate sector will continue to be considered a refuge value for investors and, therefore, despite the fact that a generalized adjustment is expectedthe figures will continue to be higher than those reached in the years prior to the pandemic,” adds Ferrer-Bonsoms.
Between 800 and 1,500 euros per m2
Solvia’s business director also recalls that the “characteristic feature” of the Spanish real estate market is “its high degree of heterogeneity by territory”.
The regions with the greatest price drops in the fourth quarter of 2022 were Extremadura, with 10%, La Rioja, with a 7% decrease, and the Canary Islands, with an adjustment of 6%. On the contrary, the highest increases were those of the Balearic Islands, of 6%, Region of Murcia, of 4.5%, and Andalusia, of 1.5%.
In the breakdown by provinces, the most expensive m2 was paid in Guipúzcoa, the Balearic Islands and Madrid, over 3,000 eurosfollowed by the more than 2,770 euros per m2 registered in Vizcaya and Barcelona in the fourth quarter of 2022.
The most affordable provinces in Spain, in the fourth quarter of 2022, were Ciudad Real, Badajoz and Cuenca, where the m2 was below 700 euros.
Despite the skyrocketing prices in some provinces, or the case of these other last three provinces, the price range in Spain moves between 800 euros per square meter and 1,500 euros per square meter.
Drop in sales in 2023
The real estate market was marked in 2022 by inflation, the rise in interest rates and the tightening of financing conditions. This has been reflected in a slowdown in transactions carried out between October and December, as Solvia recalls in its report.
The number of residential property sales reached 150,141 operations in the last quarter of the year. This figure represents an increase of 4.3% compared to the same period of the previous year, and, at the same time, a drop of almost 11% compared to the three previous months.
Used housing transactions grew by 7.7% year-on-year at the end of the year, and represented 83% of total sales. For their part, new construction fell by 9.4% and accounted for close to 17% of total operations.
Compared to the third quarter of 2022, used home sales contracted by 10.8% and new home sales by 9.6%.
By autonomous communities, Andalusia, Catalonia and the Valencian Community led the transactions, with more than 20,000 sales each, followed by the Community of Madrid. By provinces, the negative trend prevailed in almost the entire country, with a double-digit drop in the number of transactions. The most accentuated collapse was that of Zaragoza, with a drop of 24.9%.
Solvia estimates that the number of sales transactions in 2023 it will be close to 600,000 operations. In the case of new construction permits, Solvia highlights that figures “not seen since 2009” were reached, with a total of 108,895 new licenses in 2022.
The fourth quarter of 2022 closed with 30,608 approved homes, a figure 3.8% higher than that of the same period of 2021 and 18.1% higher than that of the three previous months.
By provinces, Barcelona, Madrid, Malaga, Valencia, Seville and Alicante accounted for 48% of visas in Spain. Madrid and Barcelona concentrated around 31% of the construction licences.
Rising rents
The rental price closed 2022 at 11.5 euros per m2, which represents an increase of 8.5% compared to the same period last year and 1.8% compared to the previous quarter.
Solvia’s prospects suggest that Rental prices will continue to rise throughout this year due to the increase in demand, much of it rebounded from the purchase. The real estate services company also believes that the 2% rent cap through 2023 will also make some landlords reluctant to give up their available homes for rent.
Experts point out that the lack of supply will translate into an increase in rents of between 15% and 20%, with markets stressed in the coming months.
The highest rents in 2022 were in Barcelona, Madrid and Guipúzcoa, with the price per square meter at 16.8 euros, 15 euros and 14.9 euros, respectively.
Ferrer-Bonsoms points out that this interest in renting will continue to grow in the future, “either because of the difficulty of accessing the property or because the new demographic and social realities draw a new scenario where renting is no longer just an obligation determined by circumstances, but a life choice”.
“It is essential to bet on a structural housing plan with a long-term vision that take into account the rent within their priorities”, he points out.
Solvia also perceives in its report that housing prices in Madrid are beginning to approach those of Barcelona, two of the cities with the most expensive m2 in Spain, only surpassed by the 4,074 euros of San Sebastián.
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