The Spanish property market closed 2022 with over 650,000 sales and consistent price rises. As a result, it sits on robust foundations to ride out this year despite the headwinds of the Ukraine war and rising mortgage rates. In 2023, experts predict fewer sales, lack of supply and moderation price rises.
Robust scenario for property market in 2023
Residential real estate has proven to be a resistant asset since the outbreak of the pandemic and markets worldwide have seen consistent upticks since 2020. Spain is no exception, and its property sector has enjoyed a buoyant two years.
Consequently, the Spanish property market sits on robust foundations and experts are generally optimistic about its performance during 2023. Much will depend, however, on macroeconomic figures, including inflation and interest rates.
Fewer transactions in 2023
2022 will go down in the annals as one of the busiest years for the Spanish property market. Over 650,000 homes changed hands last year, the highest level since 2007. The figure is also almost 100,000 more than in previous years.
Analysts expect lower sales in 2023 for two main reasons. Firstly, the predicted further rises in mortgage interest rates will dissuade many buyers from purchasing this year. And secondly, a lack of supply will inevitably bring down the transaction rate. As a result, 2023 will see around 557,000 sales, 14% less than in 2022.
Spanish property prices in 2023
However, analysts believe that fewer transactions won’t necessarily lead to a price drop. On the contrary, they expect values to remain stable, particularly in Spain’s largest cities and coastal areas such as the Costa del Sol.
They also point out that Spain is one of the countries in Europe where property prices have risen the least over the last few years. As a result, the market is stable. “This scenario makes it more attractive from an investment point of view,” said Beatriz Toribio, Director of Masteos.
In fact, most experts agree that property prices will continue to rise during 2023, albeit more moderately than during 2022. The consensus predicts a slight uptick of between 1 and 1.7%.
Solid demand for new builds in 2023
New homes stand in the Spanish property market in 2023 as a particularly consolidated sector. New construction attracts much higher demand than supply, giving the sector stability regardless of the macroeconomic situation.
The largest developers in Spain already have pre-sales of over 70% for their projects over the next two years. Some estimates go even further. The President of Spanish Developers (APCE), Juan Antonio Gómez-Pintado, says that developers have sold 93 to 95% of all products for 2023 and almost 40% for 2024.
Rentals in 2023
The Spanish rental market saw unprecedented demand and price hikes in 2022, and analysts believe 2023 will mirror these trends. Some experts believe demand will rise even higher. “Residential rentals will continue to gain a share of the market because of the unstoppable growth in demand,” said Concha Osácar, founder of Azora.