Spain | Real Estate Watch. January 2024

The residential market is in a process of adjusting sales due to rising interest rates and the slowdown in neighboring economies, yet the level of sales remains relatively high. Nevertheless, housing prices continue to grow as a result of the shortage of supply.

Key points

• Key points:
• Home sales fall (around 12% in 2023 and 5% in 2024) due to rising interest rates, loss of purchasing power and the eurozone slowdown. New building permits show stagnation (+1.5% in both 2023 and 2024), at low levels, given regulatory uncertainty, high costs, reduced public support and lack of human capital.
• Prices continue to grow (+3.5% in 2023 and +2.5% in 2024), given the mismatch between supply and demand, although falling in real terms. These trends will continue in the short term given that there is no prospect of a reversal of these factors during the first half of the year.
• Growth will return to the sector in 2025, thanks to the expected recovery in the Eurozone, falling interest rates, improved purchasing power of household income, and the increase seen in immigration. Housing sales are expected to increase by around 3% in 2025 to 615,000 units, approvals (+15% to 130,000) and prices (+4%).
• A regulatory framework that encourages and accelerates investment is needed. This requires a significant reduction in the cost of administrative requirements in terms of time and money. A training and immigration policy that responds to the demands of the sector is necessary.

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