Atipika presents some predictions for the real estate market in 2023. After overcoming the difficulties caused by the pandemic, we ended 2022 with a remarkable strength in the real estate sector. Despite rising interest rates, commodity prices and inflation, the real estate market has recorded good sales activity, closing the year with a total of 719,680 sales.
So, what is expected for the real estate market in 2023? Here are the different factors that will contribute to the fall and/or rise in prices:
Firstly, as we have previously mentioned, there will be a rise in interest rates, which will discourage buyers from taking out a mortgage. Secondly, there will be a reduction in new build properties opportunities due to the high cost of materials.
At the same time, however, there will be high foreign demand. This, together with the development of technology and the reduction in offers, will contribute to higher prices.
“The imbalance between inflation, interest rates and the reduction of the offer (due to excessive legal and tax regulations, and political encroachment), can further stress the market and make housing less affordable for the domestic market. This may also displace the product to the rental market with exorbitant prices” says Isabel Osorio, founder of Atipika.
If we go back to 2021, a long period of low interest rates, 68% of all mortgages signed in Spain were fixed rather than variable. However, in 2023, this trend will be reversed with the European Central Bank, raising interest rates for the first time in 11 years.
Higher mortgage delinquencies are also expected in 2023. It is estimated that 1.5 million Spanish families will be highly indebted to their banks, as their mortgage repayments will exceed 40% of their monthly income. This will lead to a reduction in demand for property purchases. However, in places like Barcelona, sector experts do not expect a sudden correction in the Barcelona market, but rather a low intensity recession.
As Isabel Osorio points out, “The real estate market is a safe haven in times of general instability. In comparison to other European and world cities, we continue to be a competitive market in terms of quality/price”.
The areas that are expected to be most affected by the fall in prices will be the rural areas of Spain, or those with a much lower demand than Barcelona. This is what Isabel Osorio tells us “There is a clear positioning of investment in areas considered “safe” such as Barcelona city or nearby suburbs. However, in areas further away from Barcelona or rural areas, there might be a stagnation of prices”.
As we mentioned in our summary, we will continue with one of the trends of 2022: while the price of used property stabilizes, the price of new property will continue to rise. Throughout 2023, luxury properties are also expected to continue to sell, as prices have continued to rise in the uptown area of Barcelona, and new technology developments have also added to this.