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Will House Prices Increase in Spain in 2024? Analysis and Perspectives

As we move into 2024, uncertainty persists in the Spanish real estate market due to the rate hike cycle initiated by central banks. Although this phenomenon usually puts pressure on housing prices, various circumstances suggest that we could see a different scenario in the coming months.

Current Economic Scenario

Expectations, according to Félix Lores, economist at BBVA Research, indicate that housing prices could continue their upward trajectory in 2024. Although in real terms it could remain negative, factors such as a shortage of supply, changes in mortgage financing and the situation labor contribute to the complexity of the panorama.

Differences from Past Crises

Comparing the current situation with the 2007 financial crisis, notable differences stand out. The oversupply of housing back then contrasts with the current shortage, especially in new construction projects. Furthermore, the nature of mortgages has evolved, with a significant increase in fixed rate mortgages, reducing households' exposure to changes in interest rates.

Supply and Demand in 2024

The shortage of housing supply, especially new housing, together with the robustness of the labor market, keeps demand relatively strong in 2024. Despite an expected decline in sales, the level of transactions is projected to be close to those of 2019, and the forecast for housing price growth in 2024 is 3% in nominal terms, with a real variation of approximately -0.6%.

Challenges and Opportunities

The interest rate hike cycle poses challenges, but also opens opportunities for market reassessment. The transformation in supply and demand, as well as the evolution of economic conditions, could significantly influence the direction of the real estate market throughout 2024.
In short, as we navigate the year 2024, the Spanish real estate market is at a crossroads. Detailed analyzes and understanding of the economic and financial factors at play are essential to anticipate trends and the potential impact on house prices.