The Spanish real estate market continues to experience a decline in home sales and mortgage signings, as seen in data from the Council of Notaries. In March 2023, home purchases were down 11.7% compared to the same month of the previous year, with a total of 63,661 properties purchased. This cooling of the market has been registered since the end of 2022, due to the aggressive policy of the European Central Bank to raise interest rates to reduce inflation and, therefore, make financing more expensive. According to a study by Fotocasa, the increase in the cost of living already affects 59% of buyers, leading them to stop or rethink the purchase.
This slowdown in sales has continued for six consecutive months, and sector experts believe that the year-on-year falls in the number of transactions will continue in the coming months. Only Galicia recorded a growth in the number of transactions, while the rest of the autonomous communities experienced falls, the most significant being in La Rioja (-38%), Madrid (-22.9%), Catalonia (-12.5%), the Balearic Islands (-16.1%), and the Canary Islands (-17.3%).
The price per square meter has experienced a decrease of 2.6% year-on-year, to 1,580 euros, but it is still not a sufficient incentive for the potential buyer. Moreover, there is no uniformity in prices throughout the country, since in the same month prices grew in the Canary Islands by 9.5% but decreased in Cantabria by 7.7%.
The number of mortgage loans for the purchase of housing decreased by 26.4% in March, reaching 27,192 operations, which represents a decrease of four consecutive months. The weight of purchase transactions without financing has increased to 57.3%, with a majority of purchases made by investors who do not need financing and by people who already own a home.
In summary, the Spanish real estate market continues to suffer a slowdown in home sales and mortgage signings due to the ECB’s policy of raising interest rates and the rising cost of living. Although the price per square meter has decreased, it is still not enough to attract buyers, and mortgage loans have decreased while purchases without financing have increased.