Raising interest rates is slowing down the real estate market in Spain, but sales in the first half of2023 have not decreased as much. Article Olive Press News

In the first half of2023, the increase in interest rates leading to a rise in mortgage costs slowed down the Spanish real estate market. The National Statistics Institute reports that315,783 houses were sold in the first half of the year, which is4.5% less than in the same period in2022.

A year ago, Spain was experiencing a boom in the real estate market, which began to slow down by the end of2022. Experts describe the latest real estate sales data as "good" or "better than expected." Putting aside the two-year boom after the peak of the Covid pandemic, the number of sales is comparable to those recorded in2008, and in2022 alone, more than300,000 homes were sold in the first half of the year.

Jose Maria Alfaro, President of the Real Estate Associations Federation (FAI), said: "With such an intensive increase in the Euribor mortgage rate by four points in a year, talking about a decrease in sales of less than10% seems like a more favorable situation than we predicted four or five months ago." Alfaro believes that there will be a10% decrease in sales for the whole year compared to the650,000 transactions recorded last year..

Javier Kindelan, head of the consulting company CBRE, believes that the decline will be much greater. "The total number of sales will decrease by about24% by the end of the year," he predicts.

Both experts agree that the market will continue to shrink in the coming months, as notary data from the end of June shows a 12.9% decrease in transactions. Information from notaries reflects the moment of signing the real estate purchase agreement and usually lags two months behind the official housing sales data.

Teresa Barea from the General Council of Notaries says: "The reduction in mortgage issuance means that there are people who cannot obtain financing for purchases, and there are also potential buyers who, due to the economic situation, decide to postpone their plans."

Realtors also notice that clients are delaying purchases, as José María Alfaro says. "Agents are receiving a third of the inquiries they were getting a year ago, but it's not that real estate isn't selling; it's just taking longer," he says. "If a year ago you sold a house in 30 days, now it takes 60 days."

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