Author: Irene Hernández

Source: Bolsamanía

A real estate market adjustment is expected after a highly dynamic 2022 in the sector, but it is expected to regain momentum afterward. Will 2023 be a good year to buy a home? No price increase is anticipated, and given that there will be less demand, buyers will have more negotiation power.

After several years of rising real estate prices, it is expected that in 2023 “there will not be a price increase like in recent years,” says David Gordo, head of key accounts at Housfy Real Estate, who believes that “2023 could be a good year to buy a home,” because “with fewer buyers opting to acquire a property, the buyer has more negotiation power with the seller.”

However, he points out that the value of the property will be influenced by demand, which “we expect to concentrate in large cities, their metropolitan areas, and coastal towns, making the price of housing not decrease, and it may even increase, although not above the CPI.” However, “in other areas, a price drop is expected due to a decrease in demand,” he says.

He also indicates that the forecasts for 2023 and 2024 “are very similar.” For these two years, he estimates “a volume of real estate transactions around half a million per year.” This figure would be somewhat below the approximately 600,000 real estate transactions obtained in 2022. Therefore, he foresees an adjustment in the real estate market. Conditions such as “stability in mortgage interest rates and the labor market” must be met for it to experience growth again.

“Although we expect a change in trend in 2023, real estate activity will continue to be an important economic engine, with levels of activity higher or similar to those achieved in the years before the pandemic,” says Ernesto Ferrer-Bonsoms, business director at Solvia. According to his analysis, 2022 will close with approximately 640,000 sales, a figure that would far exceed the previous year’s, to adjust around 580,000 operations in 2023.

Is it a Good Time to Invest in Real Estate?

For Housfy, those who want to do so should know they can find a good opportunity in 2023, even though the economic uncertainty we live in suggests otherwise.

Trends Coming to the Real Estate Market

Meanwhile, the Union of Real Estate Credits (UCI) provides eight trends that will happen in the real estate market in 2023. The first is that interest rates will not surpass the 3% barrier. They believe that the evolution of the Euribor will start to adjust once it reaches this level, “as long as inflation remains controlled.” Also, “long-term interest rates could become cheaper, although not to the levels we have known in recent years.”

Secondly, there will be the end of the supremacy of fixed rates. The rise in interest rates has been widespread for all terms, a situation that has made these products, which had been predominant in recent years, lose some of their appeal. The third point is price adjustments. The contraction in demand will cause areas with a considerable real estate supply to see a slight drop in housing prices. This will not be the case in areas where there is still strong demand, not only from home buyers but also from investors or international buyers.

The fourth trend will be less demand and more time for the purchase decision. Economic uncertainty makes many buyers decide to delay the acquisition of a new property, “so it is likely that housing demand will adjust throughout 2023.” “The number of potential buyers decreases, and those who buy take longer to decide, so the number of housing transactions, which reached record figures in the months of recovery after the pandemic, is expected to experience some adjustments next year, approaching more the 2019 figures,” they calculate.

In fifth place, the dominance of second-hand housing due to the shortage of new construction stock. “The volume of new construction will remain moderate because the level of prices reached due to the strong increase in costs, both of materials, energy, and labor, make this type of housing out of reach for most buyers.”

In sixth position, the rehabilitation of housing, which will be one of the most dynamic markets, both in terms of volume of operations and job creation, largely thanks to the incentive of the Next Generation EU Funds. As a seventh trend, rental prices will rise given the shortage of supply. Lastly, the real estate market will continue to be marked by the difficulty young people have in accessing homeownership.