Fotocasa forecasts a 12% drop in home sales by 2023

MADRID, 28 Nov.

Fotocasa forecasts a 12% drop in home sales by 2023


The real estate portal Fotocasa forecasts a 12% drop in sales operations in 2023, slowed down by the rise in interest rates by the European Central Bank (ECB), as reported in a statement on Monday.

Inflation also appears among the causes that will slow down the pace of purchases, since the purchasing power of families will be diminished throughout the next financial year.

Despite this halt in demand, Fotocasa estimates that the price of homes will remain without sharp falls, since "there will be a very strong latent demand for acquisition", since many buyers have been forced to paralyze the purchase processes due to rate hikes.

The real estate portal forecasts price adjustments in the middle of 2023, but "far from major declines." However, new construction will continue the opposite trend, with prices rising due to the "unprecedented boom" in demand since the pandemic.

Fotocasa warns of "a serious problem of price rises" if the demand continues so strong, since it will find itself with an increase in the cost of materials due to inflation, the slowdown or stoppage of some promotions and the scarce supply of new construction. Added to this are other factors such as the difficulty in buying finalist land and the lack of qualified labor, according to the real estate portal.

The rental price has registered in 2022 increases of over 15% in Madrid, 17% in Mallorca, 20% in Barcelona, ​​25% in Valencia or 27% in Malaga, according to data from Fotocasa.

The real estate portal also observes an imbalance between supply (3%) and demand (16%) of more than 13 percentage points, "which pushes prices up."

Fotocasa acknowledges in its analysis that "the inflationary context does not allow very rosy forecasts to be made", since the increase in rates will transfer demand from buying to renting and will exert "pressure on the limited supply available".

Fotocasa's forecast is that rental prices will rise by 5% year-on-year in 2023, due to the transfer of frustrated demand since the purchase.

This increase in demand in the rental market will be accompanied by a "very pronounced supply contraction", close to 35%. Fotocasa attributes this fall to the "frenzy to sell, the return of tourist apartments to the holiday market and the over-regulation of rentals".

The real estate portal also cites among these causes "the possible entry into force of the Housing Law." However, to date only the bill has been approved in the Council of Ministers and Congress is still studying the more than 800 amendments submitted.

Fotocasa recognizes those under 35 as the group with "the most difficulties in relating to the home". This group is one of the "most active in the market" and, at the same time, the one that "has the fewest opportunities", with the perspective of becoming owners increasingly distant due to "their unstable and precarious employment situation that prevents them from saving to give the entrance of a house".

The real estate portal urges to guarantee purchase aid to promote the emancipation of young people and lower the age of independence. It also advocates facilitating general access to housing, since inflation could raise the salary effort of families to 35% for the payment of housing.

Among the measures that Fotocasa proposes to face the housing problem in 2023 is the expansion of the rental offer. In this sense, it recalls that 95% of the housing stock is in the hands of small owners, so it reminds the Administration that it must protect the most vulnerable tenants and provide security to the owners at the same time. For the latter, the real estate portal claims tax discounts, non-payment insurance and incentive measures so that they put their homes for rent.

Likewise, it urges public-private collaboration for the development of public and social rental housing stocks.

The mobilization of empty homes is another of Fotocasa's commitments for 2023. Their estimates suggest that among the owners of two homes there are 10% who have one empty and among those who have three or more, 23% are in this situation. The solution passes, in the opinion of the real estate portal, through tax incentives and aid for rehabilitation.

Fotocasa questions "the alterations in market regulations" that keep investment away and proposes "to streamline legislative procedures for the promotion of new-build housing."

In the financial field, the real estate portal recalls that banks "will have a fundamental role in preventing evictions from being repeated as in previous years" and recommends that entities adhere to the Code of Good Practices to alleviate rising mortgage prices.