Title: New Home Sales Reach Highest Figure Since March 2022, With Seven Regions Recording Double-Digit Growth
Author: Mónica G. Moreno
Source: El Economista

After a dip in December, home sales resumed their upward trend in January with a year-over-year increase of 6.6%, reaching 56,372 transactions. This is the highest number recorded in the first month of the year since 2008 (61,800 transactions), according to data from the National Statistics Institute (INE). This increase comes after home sales closed 2022 with a rise of 14.7% and nearly 650,000 transactions, the highest number since 2007, despite the slowdown at the end of the year (-10.2% in December).

“This number of transactions indicates that the real estate boom phase is not yet over. Far from slowing down the demand for purchases, the impact of rising interest rates is accelerating it, at least temporarily. The sector shows great resilience by coping with the change in monetary policy and avoiding a sharp disruption in the market. The transformation is smooth and gradual,” says María Matos, director of Research at Fotocasa.

Meanwhile, Ferran Font, director of Research at pisos.com, notes that “we continue to see record numbers whose year-over-year growth is increasingly moderating as the months progress. Most likely, the slowdown will become dominant, depending on the evolution of inflation and the ECB’s response in terms of rate hikes, the impact of uncertainty caused by the war in Ukraine on the market, and the effects of implementing the new Housing Law this year.”

By type of housing, used homes accounted for 81% of the transactions, reaching 45,501 units, representing a year-over-year increase of 6.2%. In the case of new-build homes, the growth in sales compared to January of the previous year was 8%, reaching 10,871 transactions, the highest figure since March 2022 (11,510 units).

“The new-build housing segment is experiencing an unprecedented boom since the outbreak of the pandemic. However, we could face a severe price increase issue if demand remains as strong. Not only due to runaway inflation affecting the cost of materials, production, and logistics, causing some projects to slow down or stop, but also due to strong and solvent buying demand versus the scarce productive levels of new homes,” explains Matos.

Six Exceptions

Home sales increased in eleven regions, with seven of them recording year-over-year double-digit growth. These regions are Navarre (19.7%), Region of Murcia (16.6%), Valencian Community (15.5%), Asturias (13.6%), Castile and León (13%), Aragon (11.8%), and Catalonia (10.9%). In contrast, growth was more moderate in the Basque Country (9.4%), Extremadura (7.4%), Canary Islands (6.1%), and Andalusia (3.7%).

On the other side, six regions saw fewer home sales in January compared to the same month of the previous year. These regions are La Rioja (-14.4%), Cantabria (-4.3%), Galicia (-3.9%), Balearic Islands (-2.3%), Madrid (-1.7%), and Castile-La Mancha (-1.6%).