The average amount of mortgages in Spain grew by 8.14% in the period of one year, following the progressive and historic increase in interest rates by the ECB which stood at 1.25% in September 2022 .
Despite high prices and economic uncertainty, a total of 384,717 sales were recorded between January and July 2022, which implies an increase of almost 21% compared to sales closed in the same period last year.
The Compracasa real estate network signals the trends that are marking a real estate market driven by inflation, where 8 out of 10 sales are used homes and 73% of the mortgages used to finance operations are fixed rate.
Although inflation in September dropped to 9%, one and a half points lower than the data collected in August by the INE, this is still a fairly high figure that exceeds the numbers for the same month in 2021 by five points. inflationary, caused by economic uncertainty and the war situation in Ukraine, is mainly affecting the real estate market and financing solutions, as the ECB announced a 0.75% increase in interest rates at the beginning of September ( the highest rise in the history of the euro zone) to 1.25%, with the aim of fighting inflation.
This situation has led to a general increase in the price of mortgages granted in Spain, which in July 2022 reached an average amount of 146,445 euros per loan according to the latest figures from the INE. This represents a growth of 8.14% compared to the same month of 2021 (135,416 euros). In turn, the number of mortgages established on homes decreased by 16% between June and July, precisely to 35,918 mortgages underwritten, but these are still figures higher than the number of mortgages granted before the pandemic, precisely 33,765 in July 2019.
In this sense, it is worth asking whether the general increase in prices that has hit Spain since the beginning of 2022 is affecting the movement of real estate sales among Spaniards and whether new demands have been created or the habits of buyers have been maintained. . Faced with this situation, the Compracasa real estate network analyzed the main trends of a real estate market characterized by the constant increase in prices.
Movement in trade.
Despite the general increase in prices in all sectors, as well as in the amount of mortgages, the Spanish real estate market has not so far recorded a sharp change in terms of sales. By contrast, a total of 384,717 transactions were recorded from January to July 2022 according to the latest INE data. These figures represent an increase of nearly 21% compared to sales closed in the same months last year, in which 318,564 transactions were recorded.
“Despite the clear situation of economic uncertainty and price increases in Spain, buyers have not stopped buying homes in recent months. This indicates the strength of the real estate market as a safe haven value in times of instability ”, says Toni Expósito, CEO of Compracasa.
The stable sales situation in Spain will continue, at least, until the end of the year. This is what the professionals consulted in the XII edition of the UCI and SIRA Real Estate Barometer affirm. According to this report, just over half of Spanish real estate professionals (52%) expect operations to remain at the same level or increase during the last quarter of 2022, while 44% of agents expect moderation or decreases of between 5% and 15% at the close of the operations.
Used in front of a new house and apartment in front of a single-family house.
Traditionally, Spanish buyers have always preferred to buy a second-hand house over a newly built one, mainly because the latter are more expensive. This difference has increased slightly in the last year due to inflation, as so far in 2022 8 out of 10 home sales in Spain according to the INE have been second-hand, while in all of 2021 this percentage reached 79% a favor of used houses. Additionally, single-family homes, which generally tend to be priced higher than apartments, have experienced slower sales levels. Therefore, the General Council of Notaries says that in August 2022, apartment sales increased by 10.1% year-on-year while single-family homes grew by only 1.8% year-on-year. This was most pronounced in the previous month, where apartment sales increased 6.1% year-on-year while single-family homes fell 6.2%.
Fixed rate mortgage growth.
Traditionally, the mortgage market in Spain has been evenly split between fixed rate mortgages and variable rate loans. But gradually the balance tilted in favor of the fixed rate, a situation which increased considerably after the increase in the indicators that regulate interest on variable mortgages such as the Euribor. Such is the case that, since January 2022, 73% of the loans granted are at a fixed rate, while this percentage in 2021 reached only 62.7%, according to data managed by INE. As for the average duration of mortgages, inflation has not yet influenced the 24-25 years that have been granted for several years.
