Data released by the INE shows that 2022 was a record year for property sales, reaching almost 650,000 sales closed. The figures for the end of the year showed a 14.7% increase over the previous year. The sharp increase comes despite five rate hikes and a change in monetary policy from the ECB, showing there is still desire for property in Spain and the market is very strong.
In December 2022, there was over 43,000 transactions closed, taking the total for 2022 to 649,494. This is the highest figure since 2007. It seems that far from slowing down purchasing, the rate hike has actually accelerated it, at least temporarily. The comparison with 2021, which was also a record year with over 550,000 transactions, was surpassed by a massive 14.7% in 2022.
Despite the great dynamism, it must be taken into account that the purchases closed in December were not yet subject to November interest rates, because they are operations that take an estimated time of between 60 and 90 days, between the signing of the deposit and the granting of the mortgage, so it is likely that the sales signed in December maintained an interest rate similar to that of October when the Euribor had not yet reached 3% and that and slowing had yet to take effect since they are operations had already been previously agreed.
New Home Sales Increased
One of the most interesting data points was that new homes made up 18% of the total sales, 2.6% more than in 2021. “The new-build home is experiencing an unprecedented boom since the outbreak of the pandemic. However, we may find ourselves with a serious problem of rising prices, if the demand continues so latent. Not only because of runaway inflation, which affects the cost of materials, production and logistics, which has slowed down and paralyzed some promotions, but also because of the strong and solvent purchasing demand given the very low production levels of the brand new house“, explains María Matos, Director of Studies at Fotocasa.
With the level of sales reached, 2022 was only 16% short of the figures seen in the height of the bubble back in 2007. The figures for December do however show a slight slowdown compared to the rest of the year. This may be indicative of a rush to buy before the interest rate changes took effect. Also, we can’t ignore runaway inflation that is hitting buyers’ pockets and their ability to save, which is being diminished by large increases not only in energy and fuel, but also in shopping basket.
In the long run, people will find it harder to save enough for the purchase or a house as they have been before, and this is likely to have a knock-on effect in the sales figures later this year. Also, successive rate hikes will make it harder to obtain credit and make it more expensive which will exclude a significant number of prospective buyers.