Housing will rise slightly in 2023 and rent will skyrocket

An explosive sprint followed by a moment of respite. The home purchase market was a sprinter in 2022, driven by favorable winds from family savings and good financing conditions, much more accessible than the historical average. But after the overexertion it is time to lower the heart rate, and that is what will happen in 2023. This is the estimate of the panel of 20 experts in the real estate market consulted by EXPANSIÓN, among which are actors from all segments of the sector. The complex economic conditions force this period of relaxation: savings vanish, economic conditions harden and the labor market does not accompany. A combination of factors that creates a propitious breeding ground for a turning point in the sector. Meanwhile, the rent, further stressed by the demand, will continue to tighten.

"In the current context in which the economic recession is looming and the tightening of interest rates is sharpening to curb the inflationary process, a downward adjustment in housing prices is foreseeable. In any case, we do not expect significant falls given that the scenario we are considering is a moderate and rapid crisis", summarizes Yolanda Fernández, director of Studies and Statistics at R.R. of Acuna and Associates. The translation of this moderate and rapid crisis into numbers is as follows: in 2023, purchase prices will advance timidly, around 0.5%, when last year they did 6%, while sales, after an impressive 2022 (650,000 operations, figures not seen since 2007 and almost 100,000 more than some of the best previous years), they will yield 14%, standing at 557,000.

Compared to a similar exercise carried out by this newspaper in November, the expert panel forecast is more optimistic for the end of 2022 (they estimated 640,000 operations and a 5.1% increase in price) and more pessimistic for all of 2023 (570,000 sales and increases of 0.8%). This is due to the fact that, in the last third of last year, the buying and selling market worked better than expected because many purchase decisions were made in anticipation of the increase in the cost of financing due to the rise in interest rates. On the other hand, for 2023, disappointing economic growth is expected, which has a great influence on the market. The most pessimistic is Gonzalo Bernardos, professor of Economics at the University of Barcelona, ​​who speaks of a 5% drop in prices: "What really affects the real estate market are the economic conditions and this year, finding a job is going to be hard." The lack of supply also affects, as indicated by Anna Puigdevall, general director of the National Association of Real Estate Agents: "The market continues to have a significant lack of supply, which means that there will not be a big drop in prices."

New construction, essential for a healthy housing market, will continue to struggle, leading to low output. "The increase in construction costs due to the inflation of raw material prices, the rise in energy costs, and financial costs, invite prudence, rather than an increase in investment. But even in a scenario unfavourable, the new construction has a long way to go", points out Carolina Roca, president of Asprima.

Regarding the rental market, expectations have also changed, but in this case upwards. Most of the experts consulted agree that the existing pressure in this segment, fostered by strong demand, part of which he planned to buy but with the tougher financing conditions he will no longer be able to afford it, will again lead to increases. important in 2023, and that there are already many Spanish capitals at historic highs in rental prices. Specifically, the average increase in rental prices in Spain will be 4.4%, with increases of the most diverse depending on the area. For example, it is foreseeable that in large capitals the rise will be well above the average.

"Due to the increase in effort rates, a good part of the demand will move to the rental market; this added to the reduction in stock will maintain prices," says Mercedes de Miguel, Director of Sales and Commercial Development at urbanData Analytics. Teresa Marzo, CEO of ELIX, adds that "in secondary locations there may be rent adjustments as inflation is reducing the purchasing power of families."