Although the purchase and sale of flats has been falling for months, prices remain on the rise: they have risen by 5.7% annually in Girona in the last year, the highest rise of the four Catalan provinces according to the Ministry of Housing and Urban Agenda.
Víctor Martínez is a real estate agent in Selva marítima and admits that the sales he completed in the last quarter were 30% lower than a year ago. “The market has cooled but many owners are refusing to lower prices to make their property more attractive and thus attract more buyers. Only those who have an immediate need sell lower prices. The rest are waiting for the joy of shopping to arise again.”
The delay of owners in recognizing that the market is changing could be one of the reasons that explains the current disparity. The latest data from the INE shows a decline in sales of more than 20% per year and a decline of more than 30% in the granting of mortgages for the purchase of home property. On the other hand, the average price of vacant housing increased by 5.7% year-on-year in the Girona regions in the third quarter of the year, according to the Ministry of Housing and Urban Development, representing the highest increase in the four Catalan provinces. The taxable value of the square meter in Girona is 1763 euros, the highest in more than a decade.
Neither the general increase in prices nor the increase in financing costs due to interest rate increases have slowed demand in the Spanish and Catalan real estate market for now, and this imbalance with the tightening of supply is putting pressure on prices upwards The APIs have warned in recent months that supply of apartments for sale is low. According to the study service of the real estate portal idealista, in Girona the number of houses for sale fell by 3% last year. However, the decline is higher in the areas most attractive to buyers.
The experts also warn that the construction rate of new apartments shows significant deficits: around 100,000 apartments are built every year throughout Spain, but 200,000 new families are founded.
Although the price increase in recent years may seem very high when the numbers are put into context, the nominal house price has not increased the real price all that much in recent years, and this is not expected to happen in 2024, according to the European According to the central bank, the property overvaluation index for Spain was 10.3%, while the European average was around $13.
A situation that continues to attract a lot of foreign demand to our market. After the pandemic, purchases by foreigners in Spain have recovered strongly and Girona is one of the provinces where this type of buyer is most represented, with a share of around 30%.
Against this background, most analysts and study services do not expect any major changes in the market. Most expect a moderate slowdown in the coming months, but not everyone is thinking about price declines.
One of the most pessimistic is the deputy general director of Donpiso, Emiliano Bermúdez, who predicts a 10% drop in sales and a 5% drop in prices, a “downward” trend that is a “logical” consequence of several factors, including the increase in life and mortgage prices; the lack of security and economic and legal stability for real estate investments as a result of the Housing Act and the formation of a “weak” government; and the cyclical development of the housing market”.
Cristina Arias, head of Tinsa's study service, predicts that property prices will stabilize in the first quarter of 2024, with an annual fluctuation of about 0%. And for the whole of 2024, she expects “an average annual fluctuation in housing prices between +1% and -2.5%”. This range results from a continuation of the slowdown observed in the market in 2023 following the acceleration in 2022.”
A recent Bankinter report on the property market suggests that “prices are trending towards stagnation and could even fall slightly next year. However, if this correction occurs, it will be cyclical due to the high interest rate environment.”
Carlos Balado, professor at the OBS Business School and director of Eurocofín, points to the situation that the supply of housing is insufficient to meet the needs of a growing population. He expects property prices to maintain a moderate positive growth rate of around 2% in 2024.