Most Spanish notaries agree that there is a lack of planning with inheritances among citizens Author: María Hernández Source: El Mundo

House prices rose by an average of 7.4% in 2022, although the last quarter saw a 0.8% drop compared to the previous one

Neither the historic rise of the Euribor, nor the economic uncertainty, nor the restrictions of the banks. Almost none of the factors that have marked the recent course of the real estate market have prevented house prices from registering the highest year-on-year rise since 2007, an average of 7.4% in 2022, despite the slowdown in the last quarter.

Only in this final stretch of the year did the impact of the ECB’s rate hike and the increase in the cost of mortgages begin to be felt. Not in vain, between October and December there was a 0.8% drop in prices compared to the previous quarter, something that had not happened since 2020, according to data published this Wednesday by the National Institute of Statistics (INE). This final slowdown prevented the rise in house prices from equaling the rise in average inflation in 2022, which stood at 8.4%.

The behavior of new construction bore much of the brunt of the rises, as this type of housing rose in price by an average of 7.9% (not rising so much since 2007), compared to 7.3% for second-hand housing (its highest rise in 15 years).

However, both also softened the growth of their costs in the fourth quarter of 2022. In the case of second-hand housing, the price increase was 5.3% per year, and in the case of new construction, 6.2%, the lowest rate since the same period of 2021.

From the real estate portal Fotocasa, they focus on this drop. “Although it is usual for the price to show a very slight increase or even a fall in the fourth quarter, as in 2022, in this case, the price drop could indicate the beginning of a moderation in the growth of the cost of housing. In December 2022, up to four rate hikes had already been carried out by the European Central Bank, and the Euribor was already above 3%. This situation of such a sharp rise in financing costs, added to inflationary tensions, is already beginning to have an effect on the pockets of families, which are losing more and more purchasing power, which influences the demand for purchases, which, although continues to be strong, it is likely that a high percentage have already ruled out the idea of buying in the short term”, explains María Matos, Director of Studies and spokesperson for the company.

Despite the most recent slowdown, Fotocasa does not foresee “significant drops” in prices. “What is certain is that the tensions between supply and demand will make it difficult to correct. The interest in buying still exceeds pre-pandemic levels and the reduction in supply during this past year will make it even more difficult to reach a balance quickly,” says Matos.

Along the same lines, Ferran Font, Director of Studies at Pisos.com, also points out that “the forecasts for 2023 are that this trend of increasingly less significant growth will continue, even reaching falls in those less dynamic markets where there is no strong demand that puts upward pressure on prices”.

According to his analysis, heterogeneity continues to be the keynote of real estate price statistics since the recovery began in 2015. “Although there are still notable differences between territories, the moderation in price growth is generalized,” he assures. Compared to the end of the previous year, only in Navarra has the increase been higher than in 2021; the Canary Islands and Cantabria, which are growing by more than 8%, lead this statistic, surpassing Madrid, Catalonia or the Balearic Islands, which are the territories that have historically done so. On the other hand, the market where prices have risen the least has been Extremadura with 2.8%.

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