How long will house prices continue to rise?
For months now, housing has left the coronavirus crisis behind and is showing a solid performance both in terms of sales, which are at levels not seen since 2007, and in terms of prices, with increases of more than 4%. And the forecast of real estate experts is that this trend will not only continue throughout 2022, but will also extend throughout next year.
This is the opinion of Sociedad de Tasación, which believes that the bonanza of the sector can be explained, above all, by the boom in new housing. As the appraisal company highlights in its latest report, between January and October 2021, sales of new homes increased by 21% compared to the same period in 2019.
Second-hand homes, on the other hand, recorded an increase of 5% over pre-pandemic levels during the same period.
The lack of supply and the strength of demand for new construction explain this reality. “During the pandemic, people have realised where they lived. Many have realised that they could move house and have access to a different type of housing. It has been a ‘shock’ that can lengthen the upward cycle,” explained yesterday at an event with the media the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno.
In his opinion, real estate cycles last eight years, but on this occasion the rise in prices may extend over time. Because the good performance of new housing can spread to the used flats market if European funds meet the expectations created in the real estate sector in terms of refurbishment.
Spain is different
Added to all this is the consideration of housing as a safe haven for investment in times of inflation. According to data from Sociedad de Tasación, houses have risen in price, on average, by 5.6% since 1985. A robust profitability that allows us to avoid the rise in prices unleashed, above all, by the increase in energy prices since the middle of last year.
Nevertheless, the appraisal firm predicts that Spain will remain far from the price increases seen in other countries, such as the United States. There, prices rose by 19% in 2021. “With the current unemployment rate and salaries, it is impossible for housing to rebound to these levels,” said Fernández-Aceytuno yesterday, who also recalled that the population is growing “more slowly” in Spain, which also affects the performance of the real estate sector.
By ABC Diario