After one of its best years ever, Spanish real estate has shown signs of slowing down as we come to the end of 2022. Both sales and prices appear to be cooling off slightly, although figures remain high. With clouds still on the global political and economic horizon, what can we expect from the Spanish property market in 2023?
Although analysts differ in their predictions for figures for sales and house prices, they’re unanimous that both will be lower compared to 2022. They also agree that investors will continue to see the property in key locations (including the Costa del Sol) as a safe haven.
Spanish real estate at the end of 2022
But before we move to the Spanish property market in 2023, the backstory over the last few months. Readers of our blog will recall that the first seven months of this year saw record sales and consistent price rises. The late spring and early summer were particularly busy as buyers rushed to purchase before interest rates rose even further.
Sales in Spain in 2022
However, the market in August and September experienced a slowdown in transactions. In September, for example, 57,333 properties changed hands in Spain, an increase of 6.9% in the year. The month was the best for sales since 2007.
However, analysts point out that despite the buoyant figure, it marks a change from the double-digit increases seen in previous months. Most believe it indicates a slowdown, but not an abrupt halt.
Costa del Sol sales in 2022
According to the Property Registrars’ Association, there were 10,919 transactions on the Costa del Sol in Q3 this year. This figure brings the year-on-year total to 41,898, an increase of 39.6%.
Backdrop for the Spanish property market in 2023
Based on sales figures in Q3, the Bank of Spain predicted “a fall in momentum” for the rest of 2022 and the first half of 2023. It bases its forecast on the financial uncertainty, likely to remain in place during the first half of 2023 at least and the fact that interest rates show no signs of falling.
Both factors act as a brake on demand. High inflation curtails spending power among homeowners and a higher Euribor translates to more expensive mortgages. However, inflation is predicted to halve in Spain next year. The Bank of Spain expects it to be around 4.4%, half the current rate.
The pace of new developments will continue to lag behind demand and buyers will continue to face the additional obstacles of higher prices due to the increase in construction costs.
Lower sales in 2023
Analysts are unanimous that there will be fewer transactions on the Spanish property market in 2023. After an expected 600,000 this year, there will be around 550,000 next year. However, experts point out that half a million sales a year is a healthy number and indicates a balanced market.
Prices drop in 2023
The latest figures point to an 8% increase in property prices this year, although some parts of Spain have seen much higher rises. For example, on the Costa del Sol, they went up by 11% in the year to Q3, with resale prices experiencing a 13.5% uptick.
While experts agree that house prices will fall in Spain in 2023, they differ in the amount. Pisos.com predicts that prices will be 1 to 3% lower, although with the caveat that they will see negligible changes in the busiest markets in Spain. ING forecasts a 1% rise in 2023, and BBVA Research expects the increase to be around 2%.
Nevertheless, prices look certain to rise below inflation, resulting in lower prices all round.
Looking for property in 2023?
Take advantage of our expert market and area knowledge. We’ve been helping buyers find the Costa del Sol property that ticks all their boxes since 1992, so we know more than a thing or two about prices, value and market trends. Get in touch with our team now to start your property search.