May 31, 2024

Price increases to be expected

The experts predict good times ahead for the real estate industry in Spain. A series of factors lead to the fact that prices are expected to increase by seven percent this year and by ten percent in 2025. This is what the portal Fotocasa writes, after a conference with the economist Gonzalo Bernardos held in May in Valencia.

“We are about to experience a spectacular moment in the real estate market. Demand will experience a real boom, affecting both business volume and prices.” This was expressed by the economist Gonzalo Bernardos at the last "Fotocasa Pro Academy Day" held in Valencia in May. His call to everyone with the intention of buying a home in Spain, is to hurry.

The positive outlook has several reasons; the lack of new production - which increases the pressure on resale properties, promised interest rate cuts and the banks' increased willingness to approve mortgages, the large number of foreign buyers in Spain, the many tenants who now choose to buy and a favorable economic situation in the country in general. According to Gonzalo Bernardos, there is also no risk of a property bubble, the prevailing conditions are completely different from those in 2008.

In 2023, real estate sales in Spain decreased by 10.5%, but the number of transactions without a mortgage increased by 20,000 operations. Not least is this a sign of the market's well-being, says economist Bernardos. He compares to other markets, such as the American and the German, which are not doing so well. However, the Spanish is not experiencing a crisis at all, on the contrary. More and more Spaniards are working - the number of employees is at historically very high levels - and wages have risen. Tourism brings good income to the Spanish economy, which is in the top three in the EU.

All this will lead to higher housing prices in the near future. According to Gonzalo Bernardos, we will see the biggest price increases in the lower price tiers. This is where many buyers did not get their mortgages approved last year. This will change now and he expects prices to rise by seven percent this year and ten percent in 2025 among homes in the lower and middle price levels. He points out, however, that even the more expensive properties have a bright future, thanks to the great foreign demand.

Why does Bernardos rule out a real estate bubble? “The banks have more deposits than loans. They do not need financing from abroad, therefore the number of loans will increase. The market is at its peak, there are no dark clouds in the sky. Demand from foreigners is higher than ever. The lower middle class buys and the young invest in real estate. Jobs and wage increases are created. These are good times for the real estate industry."

Source: Fotocasa

Photo: iStock