The property sector is one of the main conveyor belts for monetary policy towards a real economy, for this reason analysis is key for forecasting the economy. In this respect, Tecnotramit makes its biannual macroeconomic analysis public. We are one of the leading service companies for financial institutions and property companies in Spain and Portugal. Therefore, our panoramic view is privileged concerning how the residential and mortgage markets evolve.
The Spanish market is ‘very well-positioned at this point in time’ since nearly half of the current financial year has already gone by. Factors such as a vigorous labour market and home savings rates, amongst others, appease market accessibility issues and limit forced property sales. Private savings resistance and financial institutions’ good standing -with enough capital to absorb potential losses,- contribute in turn so feedback mechanisms, which could cause property prices to fall in the mid-term, do not need to be activated.
‘Many developed economies, like the Spanish one, have seen property prices rise significantly for years now, a trend sped up during the pandemic. This happened both because of changes in residential needs’ demand and a limited supply, and a rise in inflation and economic measures taken regarding expansive fiscal and monetary policies,’ as highlighted by Vicenç Hernández Reche, economist and Tecnotramit’s CEO.
Overall, property price grew from a cautious 2.8% year-on-year in 2019 to a 4.5% in 2020 and a 11.8% in 2021. This upward trend was curbed by 2022’s inflation, when it was clear property prices had risen at a much greater rate than salaries and household incomes; thus generating a clear imbalance in some markets.
‘As long as a hard monetary policy is translated into the real economy, the trend to reduce property prices will continue over the next quarters. Adjustment intensity and speed will depend on the imbalances generated during the property cycle’s expansionary phase. Accordingly, corrections should be stronger in those areas where property prices suffered greater overheating, there is more household debt, or access to financing has become more expensive. This correction will not be sudden but will happen over the course of the next two years,’ as predicted by Hernández Reche.