INTEREST RATE rises with the knock-on effect of making mortgages costlier has slowed down Spain’s real estate market in the first half of 2023.

The National Statistics Institute says 315,783 homes were sold in the first half of the year- 4.5% less than in the same period in 2022.

A year ago Spain was experiencing a property boom which started to slow down towards the end of 2022.

Experts describe the latest home sales figures as ‘good’ or ‘better than expected’.

Putting aside a two-year boom after the peak of the Covid pandemic, the number of sales are in line with those seen in 2008, and it wasn’t until 2022 that more than 300,000 homes been sold in the first half of a year.

Jose Maria Alfaro, president of the Federation of Real Estate Associations (FAI), said: “With such an intensive rise in the Euribor mortgage rate of four points in a year, to be talking of sales decreases of less than 10% seems to be a better situation than we predicted four or five months ago.”

Alfaro believes that a 10% annual sales fall will be recorded taking the whole year into account compared to the 650,000 transactions made last year.

Javier Kindelan, head of the CBRE consultancy, believes that the decline will be much greater.

“The total number of sales will be cut by around 24% at the end of the year,” he predicted.

“The market has behaved better than expected during the beginning of 2023, but we expect increased interest rates to have a greater impact in slowing sales down later this year,” Kindelan suggested.

Both experts agree that the market will contract further over the next few months with notary figures up to the end of June showing a 12.9% drop in deals.

Information from notaries reflect the moment that a property sale is signed and tends to have a two-month time lag on official house sale numbers

Teresa Barea from the General Council of Notaries said: “The cut in mortgages being granted means there are people who cannot get finance for a purchase and there are also potential buyers who due to the economic situation decide to postpone their plans.”

Real estate agents are also seeing clients delay purchase moves according to Jose Maria Alfaro.

“Agents are getting a third of the inquiries they got a year ago, but it’s not that properties are not selling but that it takes longer,” he said.

“If a year ago you sold a house in 30 days, it now takes 60 days.”

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