The new home price will rise throughout the year by 7.2% and second-hand will increase by almost 4%, according to a report by the XVI Observatory of Valuation of the Spanish Value Association (AEV).
Among the reasons why the price of housing will increase, up to 80% of the experts consulted have indicated that teleworking, the savings accumulated between 2020 and 2021 and the lack of manpower or the increase in the cost of materials are the elements that will most influence the costs of the new building. On the contrary, some panelists have highlighted that the context of economic uncertainty, accompanied by a rise in interest rates that could slow down demand, will cause house prices to fall.
In addition, the AEV report has placed the focus on inflation, which is expected to have some impact on investor decisions, affecting the real estate market “in a relevant way”. Thus, 62% of the experts consulted are of the opinion that inflation will contribute to “an escalation of residential prices” in Spain in the short term.
“The general expectations of an increase in inflation and interest rates are producing a certain acceleration in the increase in prices which, however, cannot be expected to continue for the end of the year”, pointed out the secretary general of the AEV, Paloma Arnaiz.
supply shortage
Six out of ten experts consulted for the XVI Observatory report agree that the needs of housing in Spain are not being covered by the construction of new housing, especially in geographical areas where there is a large mismatch between population and housing supply.
«The high figures of transactions in recent periods are an example of the existing need for housing in Spain, which is generating a clear turnover in second-hand residencesalthough not enough to solve the housing problem”, they have pointed out from the report of the XVI Observatory.
Likewise, 90% of the internal experts and 50% of the panelists external to the Spanish Association of Value do not believe that there is any intention from public institutions to develop active protected building policies, even in the face of the high demand that the arrival of Ukrainian refugees. If there are incentives, “they would not act immediately, but rather in the medium or long term”, and Spain must, first of all, improve its protected housing policy in the face of national demand, as explained by the Observatory.
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