House prices in Spain will drop by seven percent over the next few years. ING Spain expects it after an analysis of the real estate market. In particular, the sharp increase in interest rates and the tightening of credit values are causing a cooling of the market. A collapse like the one following the financial crisis of 2008 and 2009 is not to be expected.
According to the bank’s analysts, the Spanish real estate market continues to outperform the Eurozone average. In 2022, house prices in Spain will increase by an average of 7.4%. A decline of seven per cent is forecast for the next three years. Prices are not expected to rise rapidly after 2024, the bank rather expects stagnation because interest rates have risen.
Cheapest on the Costas
Although the downward trend is visible in all regions, prices have mainly decreased on the Mediterranean coast, the Balearic Islands and the Canary Islands. In urban areas, a rise in prices is expected, also due to the limited availability of land and the strong growth in demand for housing.
Trust in the market
According to analysts, Spaniards still have confidence in the real estate market. This would result, inter alia, from a consistently high demand for mortgages. The question is how long this will continue, following interest rate hikes by the ECB, mortgage interest rates will also rise, making borrowing more expensive.
climate
ING Spain notes that the Spanish real estate market still has a lot to recover 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 the Spanish residential sector decreased by 1.5%, compared to a European average decrease of 33%. Only Portugal and Greece performed worse, where emissions even increased slightly during this period.
According to ING Spain, improving the energy efficiency of buildings is essential. 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 much higher, due to rising energy prices.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
