Housing prices rise 4.9% in September despite the collapse in home sales and mortgage signing

The increase in housing prices does not stop. In the last year the price of apartments has risen almost 5%, compared to September 2022. This is clear from the data released this Monday by the valuation company Tinsa, which points to an even more pronounced price increase in the Canary and Balearic Islands, where the year-on-year increase is close to 9%.. Despite the “trend towards stabilization”, price increases persist in a context in which home sales and mortgage firms continue to decline.

House prices increased by 4.9% year-on-year in September, a growth rate slightly lower than the 5.3% recorded in August. In fact, in monthly terms – that is, compared to the price level in August – in the ninth month of 2023 the cost of real estate barely increased by 0.1%, which points, according to Tinsa, to a “trend towards the stabilization of residential prices”. Despite the increase experienced in the last year, housing prices are still 19.2% below the maximums recorded during the real estate boom.

New and second-hand housing has accumulated more than two years of consecutive price increases month after month, since April 2021. According to Tinsa data, in recent months year-on-year increases have stabilized at around 5%, which represents a moderation in increases with respect to price behavior in 2022.. In September of last year, for example, the rebound was 7.4% and reached up to 8% in October.

Despite the slowdown, housing prices refuse to fall, even in a context of cooling of the real estate market like the current one.. Without knowing the data for September, according to the latest provisional data from the College of Registrars, the fall in home sales accelerated in August while mortgages stabilized their decline. Transactions decreased by 14.9% compared to August 2022, chaining the ninth consecutive month of falls. For their part, mortgages on homes sank 21.8%.

“The reduction in residential demand is occurring gradually. The erosion of inflation on household savings and the impact of rising interest rates moderates residential sales mainly due to fewer mortgages being granted, but housing continues to channel savings,” explains Cristina Arias, director of the Housing Service. Studies by Tinsa, which indicate that maintaining employment rates is allowing households to maintain their solvency, which will slowly recover their purchasing power as inflation moderates.

An increase of 8.9% in the islands

The price increase does not affect the entire territory equally. The archipelagos are by far the areas where housing has become more expensive. In the Canary Islands and the Balearic Islands, the price of real estate has increased by 8.9% in the last year and in the last month alone its value has grown by 2.3%.. These data are far from those of the rest of the areas analyzed by Tinsa, which estimates the price increase in metropolitan areas at 5.9% compared to September 2022.. They are followed by the Mediterranean coast and the capitals and large cities, where the increase has been 4.8% and 4.6% respectively, compared to the increase of 2.1% in the smaller towns in the interior of the peninsula.

From Tinsa they point out that the exceptional performance of housing prices in the archipelagos – which is only 3.9% from the maximums recorded during the real estate boom – is due to investment by foreign buyers. “Residential demand is reducing more slowly in the segment of foreign residents. This especially affects the island territory and some areas of the Mediterranean coast, where sales by foreigners have had greater weight during the first half of the year,” explains Arias.

According to the latest data from the General Council of Notaries, the purchase of homes by foreigners fell by 7.5% in the first half of 2023 compared to the same period last year.. This decline broke the upward trend recorded in the second half of 2022. In the first six months of the year, there were 67,983 property purchases by foreign buyers. 12.7% of these transactions were concentrated in the Balearic Islands and the Canary Islands.