The main factor when analysing the Spanish economic and property markets for 2023 will be inflation evolution. While prices have risen a full 13% in little over two years, income has barely increased an average of 2.8%. Consequently, people have become impoverished and, in order to maintain consumption, families have used loans and savings gathered during the pandemic. Nevertheless, these financial sources come to an end and leave domestic demand in a very vulnerable situation.
As summed up by Vicenç Hernández Reche, Tecnotramit’s CEO, who claims latest renowned economic indicators start to show ‘signs of weakness’. In fact, household consumption already dropped 1.8% during 2022’s last quarter. Meanwhile, underlying inflation continues to rise until 7.7% recorded in February and general inflation adjusts its ascent to 6.1%. The expert warns: ‘A better outlook than expected, but still fragile.’
‘No’ to mortgage market interventionism
Tecnotramit’s CEO cautions ‘freezing mortgages is not the solution’ following the Second Vice-President of the Spanish Government and Minister of Finance, Yolanda Díaz’s, recent statements. ‘Government intervention in the mortgage market could produce negative effects, as has already happened in the rental sector. Ideological, asymmetrical, and short-term decisions cannot be taken when faced with economic situations. When it is a property issue, large landlords are at fault; when a mortgage one, banks are blamed. The Public Administration never takes responsibility,’ as Hernández Reche regrets.
To this effect, the economist reminds us: ‘Keep calm and act with caution and tranquillity, taking into account that average Spanish mortgage rates are around 3.5%. These numbers increased drastically over the last two years but are still normal given the historical series.’ As a matter of fact, average mortgage interest rates for countries like Germany and the U.S. are set at around 6.5% for the time being.