If you are interested in buying a home, you have to know that the best time to do so is now. It is the unanimous conclusion reached by experts in the real estate sector. This is mainly due to two factors: low interest rates that favor financing conditions and property prices that are still stable with the forecast that they will begin to rise progressively.
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The data corroborate this forecast. The last one was offered a few days ago by the National Institute of Statistics (INE): the mortgage firm increased by 66.9% in August to exceed 30,000 operations. It is the highest figure this month in 11 years and the highest year-on-year rate in the historical series.
Industry experts agree that it is a good moment to buy a home. “The situation derived from the pandemic has been an accelerator in the sale of real estate driven by historically low interest rates and by changes in the needs of buyers that have generated a significant upturn in sales”, confirms José Luis Bravo, director of Residential Sales en Savills Aguirre Newman.
Experts recommend betting on new-build housing and believe that cities will once again attract demand
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67% of the mortgages that were signed in August were at a fixed rate, according to the INE. This is due to the fact that this type of mortgages “generates certainty for the buyer knowing that his quota will not change in the future if interest rates rise”, explains Daniel Cuervo, general director of the Association of Real Estate Developers of Madrid (ASPRIMA) and Secretary General of the Association of Construction Promoters of Spain (APCEspaña). “With this type of mortgage, the buyer shields himself throughout the period from rising interest rates,” adds Luis Corral, CEO of Foro Consultores Inmobiliarios.
Calculator: dFind out what interests you more, if the fixed rate or variable rate mortgage
The evolution of housing prices
Despite the economic recovery, future owners should pay attention to “the evolution of house prices, which may rise in the coming years, as well as interest rates”, says Santiago Carbó, Director of Studies Financiers of Funcas.
The amount of the houses is experiencing, at the moment, slight increases. Francisco Iñarreta, spokesman for Idealista, maintains that “housing prices have not dropped during the pandemic; on the contrary, these rose after the first confinement and currently maintain slight increases ”. María Matos, Director of Studies and Fotocasa spokesperson, explains that “prices are increasing at very contained rates, with a year-on-year increase of 2.5% in September, and a small decrease is expected in October. By 2022, it is likely that we will see small fluctuations in upward prices, caused by the boom that the demand for the purchase of real estate is having ”.
This increase in prices will have a greater impact on new construction homes, according to the Tinsa research service, “due to the increase in the costs of raw materials and energy, and the shortage of labor, two factors that, if they are prolonged in time, they can end up being transferred to the prices ”.
Rising inflation and lower economic growth may alter this scenario
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Inflation can also alter the current context of stable prices. “If inflation continues to rise, it could affect the economic recovery and lead to a rise in interest rates,” argues Joan Carles Amaro, professor in the department of finance, economics and accounting at ESADE.
The advantages of buying a new construction home
Although the supply of second-hand homes continues to be greater than that of newly built properties, 80% compared to 20%, says Ferrán Font, director of Studies at Pisos.com, Cuervo believes that it is a “favorable moment” for acquiring a new-build home: “Fundamentally because of the savings it entails from an energy point of view and because it has superior qualities”.
In addition, it is possible to find newly built homes with the characteristics most demanded by buyers after the situation derived from COVID-19, such as larger spaces, terraces, gardens and common areas.
In this sense, Font assures that “the focus of demand will be in the cities”, after the health crisis has produced an increase in interest in living on the outskirts. “In 2022 there will be a correction of the previous trend” and again buyers will be interested in homes “that are close to work or the children’s school.”
Buy or rent?
Experts agree that, with the current situation of low interest rates and affordable prices, it is more advisable to buy than to rent.
Daniel Cuervo, general director of the Association of Real Estate Developers of Madrid (ASPRIMA) and general secretary of the Association of Construction Promoters of Spain (APCE Spain), argues that in a scenario of really low interest rates, in which the mortgage payment is lower in some cases than the rent, “buying a home is more interesting.” “The rent is considered an expense and the purchase an investment and a way to channel savings”, he concludes Luis Corral, CEO of the Real Estate Consultants Forum.
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