Will house prices fall in 2024? Will a real estate bubble burst in Spain? Will interest rates continue to rise? Will the evolution be the same in large cities as in other places? The forecast of
evolution of housing prices in Spain must consider many aspects to answer these questions. In this post we analyze the situation to detect what the coming months will be like.
The Spanish real estate market has experienced notable growth in recent years, with a sustained rise in housing prices. According to
data from idealista.com the
average price per square meter in March of 2024 stood at 2,079 euros/m2, which represents a monthly variation of +1.1%, a quarterly variation of +1.8% and an annual variation of +7%. However, it is difficult to predict how the market will behave in the future.
Factors that will influence the evolution of housing prices
In Spain there are various factors that will influence the
evolution of housing prices during this year. We highlight the following:
Dynamics of the Spanish economy
The Spanish economy is expected to experience moderate growth in 2024 and 2025. It is considered, according to data from
Bankinter, that GDP will increase by +1.8% in 2024 and +2.1% in 2025. This increase could have a positive impact on housing demand in Spain.
On the other hand,
tourism continues to increase and in 2024 Spain is expected to exceed 90 million foreign tourists, according to data from
Hosteltur. This will produce an increase in the demand for housing in coastal areas and in cities with great economic and business activity.
Monetary and financial policies
The increase or decrease in interest rates is another factor that affects housing demand and prices. The European Central Bank (ECB) has gradually increased interest rates, which has made access to mortgage loans more expensive and moderated housing demand. However, it is considered that the decline may be close and this will reactivate buyers.
Supply and demand for housing
The supply of new housing in Spain continues to be lower than demand, which has contributed to the rise in prices in recent years. This is a problem that has been affecting Spain for some time and it is expected that the construction of new homes will increase in the coming years, but it may not be enough to cover total demand.
Impact of the regulatory environment
In our country, various measures have been taken to increase the number of social housing and establish an affordable housing price. For example, the
Housing Law regulates measures to facilitate the construction of subsidized housing, increase the affordable rental stock and regulate prices in stressed areas.
Perspectives in big cities
The housing situation is not the same in large cities like Madrid and Barcelona as in other cities. In these large cities, prices continue to increase, especially in the most central areas, due to a very high demand and a lack of supply in the market. This trend is expected to continue, because they are places with great attraction for investors, professionals and foreigners who want to live and work in Spain.
The autonomous communities where the largest price increases have been detected according to annual variation rates are Andalusia with 5.3%, Comunidad Foral de Navarra with 4.7% and Ceuta with 4.6. %. However, the smallest increases occurred in Castilla-La Mancha with 2.1% and Extremadura with 2.2%.
Forecast for cities with lower demand and less tourist attraction
In cities where the demand for housing is lower and there are fewer tourist attractions, a trend towards lower prices is expected during 2024. This will facilitate access to housing for buyers at affordable prices.
Analysis by type of housing
The behavior of prices will vary depending on the type of home:
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In the case of new construction housing a moderate growth in price is expected, due to the shortage of supply and the increase in the costs of construction materials.
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As far as second-hand housing is concerned, the price could have a different behavior depending on the location, age and characteristics of the property. For example, second-hand homes that are in good condition and located in central areas could maintain their value or increase it, while older homes or homes located in areas further away from the center could experience a reduction in price.
Impact of inflation
During the last few months we have experienced a
general increase in prices. The shopping basket has become more expensive, as have all services and supplies. This has led to a reduction in the purchasing power of buyers and, therefore, has a negative effect on housing demand.
If this progression continues, people’s economic capacity to access housing at an affordable price will be reduced.
Recommendations for buyers and sellers
Given the uncertainty posed by the evolution of housing prices, some recommendations can be made both for people who want to buy and for owners who want to sell. We see them below.
For buyers:
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Conduct thorough research. It is essential to conduct detailed research on the local residential market, analyzing sales prices, characteristics of available homes, and market trends.
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Consider your financial capacity. As a buyer, you need to be very clear about how much money you need to buy. Consider not only the price of the home, but also the purchase and sale expenses, taxes, interest rates and expenses associated with the home (maintenance, community expenses, etc.).
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Be prepared to act quickly. We are in a market that can change very quickly, so it is important to be prepared to act quickly if attractive opportunities appear.
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Ask an expert real estate consultant for help. An experienced real estate agent can help you find the right home, negotiate the price and manage the buying process. You will save time and you will receive expert advice.
For sellers:
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Set a competitive price. In the case of homeowners who wish to sell, it is important to analyze the market to set a competitive sales price in accordance with the real value of the home, to ensure a quick sale and obtain the best possible price.
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Make improvements to the property. Investing in small improvements and renovations can increase the attractiveness of the home for potential buyers.
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Presents the home in good condition. The appearance of the home is essential to attract buyers, so cleanliness, order and decoration are important aspects to make a good first impression.
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Ask for the advice of a professional. In the case of sellers, real estate consultants help in many aspects such as: establishing the appropriate price, managing visits, negotiating the purchase price and preparing the home so that it sells faster and with a higher profitability .
The evolution of housing prices in Spain during 2024 will be conditioned by a series of factors that are related, as we have seen. The market is expected to remain dynamic and changing, with different trends depending on the region, type of housing and economic conditions.
If you need help with the sale or purchase of a home, contact us and we will advise you.
