SPANISH bank Bankinter has changed its mind about property prices in Spain this year, saying they will go up by 3% compared to a previous forecast of a 2% fall.
It has reported that ‘house prices will rise throughout this year at least in line with estimated inflation in Spain’, although it does not rule out a possible slowdown,
In 2023, prices went up 4.2%, compared to the projection that they would grow by only 1.2%.
Bankinter says that 2025 will continue an upwards trend with property price rises of around 2%.
Reasons are the strength of the labour market, the shortage of housing supply, the sharp rise in rental prices and the process of interest rate cuts by the European Central Bank (ECB), which will expected to start this month.
Bankinter estimates a shortage of more than 50,000 properties per year, compared to an annual demand of 150,000 homes.
The deficit is concentrated in the main cities such as Madrid, Barcelona, Valencia and Bilbao, as well as the Mediterranean coast, the Canary Islands and the Balearic Islands.
Added to this is the rise in rental costs due to a lack of rental housing which has fallen by 15% in the last 12 months.
According to figures from property portal idealista, this is a result of legal uncertainty, the Housing Law and the increase in other alternatives such as seasonal or tourist rentals.
Property prices in Spain could be further strained by interest rate cuts which will cut the 12-month Euribor rate.
Bankinter estimates that the 12-month Euribor will end in 2024 at 3.25%, falling again in 2025 to 2.75%, which will translate into a moderate fall in interest rates on mortgages.
Regarding housing transactions, the bank forecasts a drop of 5% in 2024, compared to the previous estimate of 7%.
Source: Theolivepress. Photo by Alexas Fotos.
