It will be the recession that will hamper access to housing in Spain next fall

When the Covid-19 pandemic in 2020, due to the uncertainty, prices of the domain collapsed, causing the access to housing it was easier than ever. After a year, as normality returned to normal and the market recovered, property prices began to rise considerably. Although prices have continued to rise this summer, this situation could change in the fall.

Currently, the economy is facing a recession which has already begun to make a dent in major world powers such as United States, and which will apparently arrive in our country in the fall. This recession is the consequence of the inflation lived, which has eroded purchasing power of Spanish families. Similarly, an important role is played by the increase in interest ratewho do the mortgageswhich may continue to increase after the new “bank tax”.

Acquiring real estate, an increasingly complex task

As indicated by the INEthe month of August showed a 3.2% drop in home sales compared to May. The data contrasts with data from 2020 and 2021 where the market was bullish with a increase of 22.7% and 3.8% respectively. These data could be the first symptoms of the housing market cooling.

Although the experts do not want to alarm the population, they speak of a “turnaround in the real estate market”, which would mean a demand and price moderation. They also underline the good situation from which we are starting, since the sale of houses is having its best moment since the housing bubble of 2007.

What happens if the economy cools?

Luis Fabra, director of real estate studies at the University of Zaragoza, talks about a concept known as “self-fulfilling prophecy”: for the real estate downturn to occur would not be caused by actual market conditions, but by people’s sheer fear of it happening. Moreover, he adds: “Citizens read the newspapers, listen to the radio… and when they are told that there will be a recession there is always a percentage of them who take it into account because these messages penetrate and paralyze their purchasing decision”. This generated fear would eventually produce the prophecy on its own.

Fabra points out: “If we go into a recession and GDP is reduced, obviously employment will be affected and also the buy houses“. The breakdown of the housing sector will depend on three factors: the damage to economic activity inflicted by the recession, its impact on employment and the evolution of rates. Finally, he adds: “The last rise to 0.5% is small, but euribor it is already at 1% so a bigger rise is expected. If this happened, it would become more expensive for families funding of his dwelling place and the demand from these households will be greater because their ability to pay is already reduced as other products in their basket become more expensive.

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