Real estate in Spain: the strongest price decline in Europe in 2019

Publication Date: 26/01/2023

ARCHIVE ARTICLE -

Home prices in Spain should continue to fall until early 2025. Spain's real estate market has experienced a strong recovery from the pandemic in 2022, despite a steady rise in interest rates, which have increased by an average of 10% per year.

Demand far outstripped supply, but rather than predicting a market collapse, experts are confident that Spain will be one of the countries where house prices will fall the most in 2023 and 2024. On the other hand, although house prices will fall by another 1% in 2024, a slight rebound of 1.5% is expected by 2025, when the market will recover again.

But according to Sylvain Brua of S&P Global Ratings, "it is unlikely that a strong recovery will occur before 2025." "We find that the adjustment to higher interest rates can last up to ten quarters and is typically twice as pronounced as after a period of low interest rates," Brua said, explaining that house prices across Europe will inevitably be affected by rising interest rates.

Unfortunately, there is no indication that these fees will be reduced anytime soon, which will naturally increase the cost of mortgages from 2025. However, given general inflation and rising costs, the increase is actually small and is likely to remain so for the next few years.

In addition, unemployment is at historic lows across Europe and most countries, including Spain, have implemented significant wage increases, meaning that homeowners now have more purchasing power than ever before.

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