The exuberance displayed by the housing market after the coronavirus pandemic it begins to wither. The growth of the sale of new construction seems to have come to an end and second-hand product operations are also growing less strongly. The number of real estate transactions new construction fell 2.5% in July after twenty months of increases, according to data made public today by the National Institute of Statistics (INE). Although operations as a whole grew by 8%, to 53,720, their progress also slowed down considerably compared to previous months, given that in June its increase exceeded 18% and in May reached 27.7%. In fact, it is the first sub-double-digit advance recorded after the pandemic. In the case of second-hand housing, the 10.4% rise is the lowest since February 2021.
Francisco Iñareta, spokesman for idealista, warns that this drop in sales shows that although the sector continues to enjoy good health, it is beginning to give signs of slowing down. “The July statistics reflect the operations signed between the months of May and June, at a time when interest rates had not yet risen but when inflation was already hitting the pockets of Spaniards,” explains Iñareta. In addition, the spokesperson for this portal adds, we must not forget that “beyond macro factors, the stock of housing on the market has been significantly reduced, which also hinders sustained double-digit growth in the number of purchases”.
In the medium term, idealista believes that although we will still have to wait several months to see the effect that rate hikes of interest approved by the European Central Bank (ECB) in July and September, and the consequent increase in the cost of financing, in the purchase and sale market, “they will probably slow down their growth even more and could even go backwards”.
Something more optimistic is María Matos, Director of Studies and spokesperson for Fotocasa. “Over the next few months we may still see intense activity in real estate since many citizens are going to try to avoid the consequences of the rate increases and perhaps bring forward the purchase of their homes”, recalls María Matos. However, she also warns that, in the long run, inflation will reduce the saving capacity of Spaniards and their chances of buying a home.
In July, the autonomous communities that registered the greatest annual increases in the number of home sales were the Canary Islands (24.3%), the Balearic Islands (19.5%) and Cantabria (19.3%). For its part, the number of purchases fell in Navarra (13.4%), Community of Madrid (9%) and La Rioja (8.8%).
The INE statistics also reflect that seven out of ten sales that were closed in July were between individuals (69.7%), which is 7.4% more than in the same month of 2021.