Housing Prices Will Rise by More Than 4% in 2022

Housing Prices Will Rise by More Than 4% in 2022

Housing costs will finish the current year with a 2% rebound and will grow by more than 4% in 2022, confirming the sector’s return to normal functioning after the pandemic and the resilience of the Spanish real estate market.

This is the forecast from the Pisos.com portal, whose head of analysis, Ferran Font, states that “housing has become one of the bastions of stability compared to other sectors that will still need time to return to pre-pandemic levels.”

The expert notes that “after the lifting of mobility restrictions, interest in investing savings in real estate has grown, however these peaks should not be perceived as the approach of a bubble — this is a logical response to deferred demand that accumulated during the pandemic.” According to Font, “now is a good time to buy, as liquidity is high and interest rates remain very low. Moreover, many are seeking to get ahead of events to avoid losing purchasing power due to inflation and to avoid price increases, as well as delays that will be caused by shortages of construction materials.”

While in 2020 housing prices were correcting downward, estimates for the end of 2021 are changing — growth in the range of 2-3% is expected in the secondary market.

For next year, Pisos.com forecasts price growth of 4-5%, which is also due to shortages of construction materials and raw materials, which reduces supply and primarily slows down new housing construction. At the same time, Font emphasizes that “sharp revaluation scenarios are not expected, as both demand and supply are stabilizing.”

The latest estimates from the Bank of Spain, contained in its Financial Stability Report, indicate real estate price growth of 5.4% in 2021-2023, although the regulator also warned that in an adverse scenario prices could fall by up to 17%.

High Activity

According to forecasts from the Pisos.com portal, 2021 will end with a figure of around 550,000 homes sold — 31% more than in the previous year — and in 2022 the number of transactions will increase by 3% compared to 2021 results.

In the mortgage lending segment, a similar trend is observed: accumulated year-on-year growth stands at 19%, according to Pisos.com data. Font estimates that mortgage volume issued this year will grow by 20% (more than 400,000), “provided that in the final stretch of the year just over 30,000 new mortgages per month will be added.”

The 2022 results will depend on European Central Bank decisions on winding down stimulus measures, which could spur demand for fixed-rate mortgages, Font believes.