Data released in June by the National Institute of Statistics (INE) show the gradual cooling of the Spanish housing market, as expected.
In April, 43,311 houses were sold, 8.1% less than in April 2022. Housing transactions have fallen for the third consecutive month leading to a 3.4% year on year drop in the first four months of the year.
Both new-built houses and the secondhand market registered a decrease in the number of transactions. The figure fell in most of the autonomous communities, with the Basque Country and and the Balearic Islands leading the fall while Cantabria and Valencia still showed an increase in housing transactions above 6% year on year.
New-built houses transactions fell by 4.2% to 8,254 transactions while secondhand deals fell by 9% to 35,057 transactions.
Despite the sales drop, the volume of homes sold in April remains solid and above 2019 levels by 5.1%.
Slowing demand is mirrored in the price growth. According to the latest data published by INE, prices in the first quarter grew by only 0.6% quarter on quarter and 3.5% year on year, that is two percentage points below the previous quarter.
No sharp contraction in prices is expected, however, as prices have grown more slowly in past years than the EU average after the post-global financial crisis housing crash in Spain. A milder price correction than other countries is expected as the risk of overvaluation is lower.
The cooling of the market is likely to continue in the coming months as rising financing costs, slower economic growth and the reduction in savings that families have accumulated during the pandemic are all factors affecting housing demand.
Despite 2023 entering a slowdown phase, characterised by a reduction in sales and a stabilisation of prices, the correction is set to be limited. Demand for property remains robust, with the number of mortgages granted and transactions still above the levels of 2019.
Gross domestic product growth for Spain is forecast to outperform the EU average by 151 basis points. Its property market is better positioned to withstand the cooling down period and is expected to outperform the EU average.