The rise of the Euribor stops the purchase of housing in its tracks
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The Spanish real estate market continues to show signs of weakness in a scenario of rising interest rates that has led to a notable increase in the cost of new mortgages on the market. Although purchase and sale operations were more active in March than in February -with a rise of 11%-, in the third month of the year only 55,778 purchases were closed, 5.7% less than in the same period of 2022.
Thus, in the first quarter as a whole, these operations registered a cumulative drop of 2.5%, according to provisional data published on Thursday by the National Statistics Institute (INE).
The reasons seem clear. A little over a year ago, the Euribor was still trading negatively. Today, it is close to 4%. The strong rebound experienced by the indicator to which most mortgages in Spain are referenced coincides with a scenario in which wages have not risen at the same rate as inflation, causing a sharp decline in the purchasing power of households. The rise was only 2.78% in the wages agreed in the agreement until December 2022, compared to an average inflation of 8.4% in the year.
In other words, many families must juggle budgets to make ends meet, and paying a down payment or increasingly higher interest rates are not among the priorities. According to the Bank of Spain, to buy a house it takes almost eight years of gross salary. And the purchase already eats 36% of the income of the Spanish, the highest percentage since 2012.
This, in turn, has caused banks to become much more demanding when it comes to granting loans, especially when it comes to access to housing. Entities do not want anything that smacks of risk -because of fear of future defaults- and the contraction of credit in this segment of the market is already a reality.
No one is spared. Faced with the resistance shown by second-hand homes in recent months, the drop in sales in March occurred both in this type of homes -which are generally cheaper- and in new homes. Specifically, the purchase of used homes fell by 5.3% in the third month of the year, to a total of 45,309 operations, while the transactions carried out on new apartments decreased by 7.5%, to 10,469 operations.
The same occurs if the data for the first quarter as a whole is taken as a reference, with a decline in operations on new homes of 3.9%, while used ones fell by 1.6%.
Regions
Last March, the highest number of home sales per 100,000 inhabitants occurred in the Valencian Community (227), La Rioja (175) and Murcia (169).
In absolute values, Andalusia was the region that carried out the most housing operations during the third month of the year, with 11,310 sales, followed by the Valencian Community (9,230), Catalonia (8,723) and Madrid (6,567).
Twelve communities sold fewer homes in March 2023 than in the same month of 2022. The most pronounced decreases occurred in Navarra (-29.1%), the Balearic Islands (-26.8%), Cantabria (-17.9%) and Madrid (-15.3%), while the most moderate were for Castilla y León (-0.3%), Murcia (-4.2%) and Andalusia (-6.3%).
In contrast, the purchase and sale of homes rose in March in the interannual rate in five regions: the Canary Islands, where they increased by 15.9%; Extremadura (+8.2%); Asturias (+7.2%); Valencian Community (+6.9%) and La Rioja (+1.2%).
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