"60% of real estate purchases in Spain are made without a mortgage: who can do it."

Housing prices continue to rise in Spain. For the first time since2008, the average price per square meter has exceeded2000 euros.

The reasons vary in each region, but most are linked to a lack of supply and a shortage of new real estate, high demand, and rising construction costs.

In this situation, housing prices increased by 7.2% year-on-year last year.

Nevertheless, there is another amazing fact: even at such a high price, more than half of all home purchases in Spain are made without a mortgage.

This is based on data from the National Statistical Institute and the latest Funcas report, which shows that only 4 out of 10 transactions require a mortgage.

That is, more than half of people buy property with cash.

Of the 832,756 properties sold from January to October of last year, the most recent available data shows that only 323,998 were purchased with a mortgage, which accounts for 38.9%.

These numbers decrease even further when considering only those sold through real estate agencies.

A little further down, but still pointing in the same direction, are the data from the General Notary Chamber, which indicate that half of the residential properties were purchased with a mortgage last April.

All analyses agree that more and more people are buying real estate with cash, and this trend is on the rise.

What does this mean? In general, it means that there are many people who buyreal estate with cash to avoid paying interest, whether by using savings or inheritance.

And, first of all, because many purchases are made from investments by funds or wealthy individuals.

So, this is speculation in the real estate sector.

There are other signs of this: a large portion of such purchases are so-called "bulk investments" by companies or wealthy foreign individuals who buy these homes not for living, but for investment purposes.

Moreover, most of these transactions without a mortgage are concentrated in tourist areas and are generally secondary residences.

A striking example is the Balearic Islands and the Canary Islands, where the percentage of transactions without a mortgage is 60.7% and 60.2%, respectively.

InMurcia, this percentage is 57.6%, while in Asturias it is 57%.

Real estate in Spain has once again become the most profitable sector for investments.

This should be supplemented by another trend: the increase in interest rates set by the European Central Bank (ECB) to curb inflation, which has led to higher financing costs.

If interest rates are rising, mortgages become more expensive because banks complicate the terms, resulting in fewer mortgage deals being made (-25.7% in July 2023 compared to the same month in 2022).

Most buyers are forced to pay for real estate without using a bank loan or even completely abandon the purchase.

It's already more expensive than the rent.

Families are increasingly facing high mortgage payments.

This phenomenon has intensified to the point that in nine cities in Spain, mortgage payments exceed rental prices, according to a study conducted by UVE Valoraciones.

For example, in San Sebastián, the monthly mortgage payment for an 80 square meter apartment is already 1870 euros (23 euros per m2), while renting a property of the same size costs 1344 euros, which is 526 euros less.

Another example can be found in Marbella, where the payment is already 19 euros per square meter (1555 euros for the house), while the rent costs 16 euros (1296 euros).

Prices are already taking up a significant portion of family incomes.

According to the latest research by OBS Business School on real estate, 45% of family income in Spain is already allocated to mortgage payments, which exceeds the average in the European Union and is 15% higher than the previous year.

At the same time, rental prices continue to rise: last year they reached a new historical high of 12.1 euros per square meter.

The average citizen with small savings has few options right now.