Home sales will drop in 2023 but will continue at a high level, according to BBVA
The home sales will suffer a slight ccontraction in 2023despite which the level of transactions will remain highwhile the initiation of new promotions will stall and the price will fall by around 2.4%, according to BBVA’s Real Estate Observatory for the second half of the year. Even though the economy will slow down higher than expected a few months ago, the report indicates that the excess savings accumulated by households during the pandemic, 129,000 million, will help sustain consumption and investment.
It also indicates that the rate hike occurs in a context of lower financial burden on families than in the real estate crisis of 2008 and that the composition of the mortgage portfolio, with older loans and a higher proportion of fixed-rate loans, will reduce the impact of the rise in interest rates.
before a foreseeable tightening of credit conditionsthe entity believes that households could be advancing their home purchase decisions in recent months and that this would explain why, after the slowdown in May and June, purchases increased in July and August.
In the first eight months of 2022, home sales recorded a year-on-year increase of 12.7%, driven largely by foreign operations, especially in the Canary Islands, the Valencian Community and the Balearic Islands, where the bank considers that “some tension could be glimpsed” in prices.
For their part, the New construction housing permits increased by 0.2%an advance that is once again much lower than that of sales that the report attributes to the uncertainty surrounding the regulation of the real estate market and the scarcity of developed land in areas of interest to buyers, together with the lack and increased cost of materials of construction, which could be delaying some projects and, therefore, slowing down the recovery.
The report also states that, although the cost of some materials of construction has begun to fall with respect to the maximum of the first semester, many of them remain at relatively high levels. In his opinion, the consolidation of the progressive reduction of bottlenecks and transport costs would help to consolidate this price reduction.
For its part, the salary data agreed in agreements suggest to BBVA experts a relative shortage of labor in the sector. It also recalls that the revision of the quarterly national accounts of the INE points to a downward revision of the recovery of investment in housing.
However, he stresses that, on the contrary, the nnew demographic projections of the INE point to greater optimism regarding the growth of the Spanish population in the coming years, to which the Government’s promotion of hiring construction workers abroad will contribute and “all of this will imply a greater need for housing”.
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