Will house prices fall by 2024? Experts make their predictions.

In the context of staggering inflation, house prices directly reflect the trends of the economy. Due to the loss of purchasing power of families on the one hand and the constant rise in interest rates on the other, people think twice before buying or selling a home.

We analyzed the available data and consulted with real estate experts from Housfy to come up with an accurate forecast of house prices in Spain for 2024.

The adjustment period is beginning. The real price of housing has already fallen in 2023. The real estate sector in Spain is different from that of other countries, largely due to the effects of the speculative bubble of 2007-2008. Although some regions, such as the Balearic Islands, are already well above the historic highs of 2008, the market as a whole is acting more cautiously than in other parts of the world.

The CPI increase in 2022 was higher than the increase in house prices. Therefore, the real value of housing has already fallen in 2023, despite its slight overall increase, as its apparent appreciation is actually less than that of other commodities. The market is starting to slow down, and the data confirms this: statistics from Spain's registrars reflect a trimestral decline of -1.5% in the average property price in the first months of 2023. This is the second quarter that shows this behavior.

What will happen to house prices in 2024? The forecast points to a stabilization of the data. Housfy's ambassador, David Gordo, notes that in major Spanish cities such as Barcelona or Madrid, "there remains a strong demand and interest in buying homes, so prices will continue to rise slightly". Meanwhile, other cities will see a decline from 2023, in which case it will, he says, "not be drastic movements". The most common hypothesis predicts data cronization by 2024, meaning the market will get used to these price levels and maintain them over time. Image description: Arndrzej Rostek

But this will not be the same for the whole of Spain. If we look at the annual price dynamics by city in the first quarter of 2023, we see that the behavior of house prices in the last year has been heterogeneous in each city, so a different direction of movement is expected in 2024.

City forecast. Prices in Madrid have risen faster than in Barcelona. According to the Spanish Registrars, the annualized change in Madrid (7.8%) was twice the annualized change in Barcelona (3.6%).

Secondary cities such as Caceres (18.7%), Segovia (16.3%) or Granada (10.0%), where home prices have risen sharply over the past year, will potentially face large price adjustments going forward. Owners are pondering. Is it better to sell now or wait? In this scenario, the public fears a collapse as sharp as the one in 2008. Owners are asking themselves whether now is a good time to sell their condo with security, and prospective buyers are weighing whether it is better to buy a home now or wait a while. And the experts' answer is clear: "You don't have to worry about a sharp drop like we had in 2008," notes David Gordo of Housfy. "It usually happens in times of great economic uncertainty, rising delinquencies and a weak labor market," a scenario we're still a long way from the current one. A woman looks at offers in real estate in Bilbao. Luis Tejido / Efe

Thus, the sale of real estate is still a safe operation, provided there is the possibility of buying a home. Despite the market slowdown to curb inflation, the risk assumed by banks when granting credit is not that high and the sector shows no signs of pre-crisis condition.

Internationally, 2023 is the beginning of a new real estate cycle. If we look at the behavior of house prices in different countries over the last, say, 50 years, we see that it often follows the same trend: it rises, peaks, declines and expands again before reaching a new peak. December 2022 was the end of an expansive cycle that began in 2007 and at the same time the beginning of a new one that could last a total of 12 to 15 years. Countries such as Sweden, Australia, Canada or the US have recently shown "overheating", so it is expected that house prices in them will be subject to a more substantial adjustment to correct this upward trend. This is supported by a recent study by CaixaBank Research on real estate markets in developed economies, whose results confirm what we have already said: in Spain, this price adjustment will be almost imperceptible.