Spanish housing market on the eve of contraction

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Spanish housing market on the eve of contraction

House prices in Spain will fall by seven percent in the coming years. ING Spain expects this after an analysis of the real estate market. In particular, the sharp rise in interest rates and tighter credit values ​​are causing the market to cool down. A crash like the one after the financial crisis in 2008 and 2009 is not to be expected.

According to the bank’s analysts, the Spanish real estate market is still outperforming the eurozone average. In 2022, house prices in Spain will rise by an average of 7.4 percent. A decline of seven percent is expected for the next three years. Prices are not expected to rise again quickly after 2024, the bank rather expects stagnation because interest rates have risen.

Housing construction in Madrid. House prices in Spain will fall by seven percent in the coming years. This is what ING Spain says in an analysis of the real estate market. (ANP / Zuma Press)

Cheaper on the Costas

Although the downward trend is visible in all regions, prices are falling mainly on the Mediterranean coast, in the Balearic Islands and the Canary Islands. An increase in prices is expected in urban areas, partly due to the limited availability of land and strong growth in demand for homes.

Confidence in the market

According to the analysts, Spaniards still have confidence in the real estate market. This would be apparent, among other things, from a persistently high demand for mortgages. The question is how long this will continue, as a result of the interest rate hikes by the ECB, mortgage interest rates will also rise, making loans more expensive.

climate

ING Spain notes that the Spanish real estate market still has a lot to make up for in terms of sustainability. The country scores poorly in terms of limiting CO2 emissions compared to other EU countries. From 1990 to 2020, emissions in Spain’s residential sector fell by 1.5 percent, compared to an average European decline of 33 percent. Only Portugal and Greece fared worse, where emissions actually increased slightly over this period.

According to ING Spain, improving the energy efficiency of buildings is crucial. Not only in terms of the environment, but also to reduce household energy bills. In 2020, according to the OECD, a quarter of Spaniards had difficulty paying their energy bills. That percentage will now be a lot higher, as a result of the increased energy prices.


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