The red numbers have been imposed in the Navarrese mortgage market and clearly show the impact of the increase in interest rates, which is being stronger on loans than on housing demand itself. So much so that in the first five months of the year the number of mortgaged homes accumulated a drop compared to the same period in 2022 of almost 9% while sales fell by just half, 4.5%. An evolution that has caused the mortgage market figures to be reversed, with more housing loans being canceled in the community than are contracted.
Specifically, according to data published by the
Navarra Statistical InstituteAs of May, 2,298 mortgages were cancelled, 23% more than last year, and 2,098 new loans were signed. The mortgage interest rate stood at 3.97% in May compared to 1.62% a year earlier and the monthly Euribor fell in August for the first time in 20 months but is still above 4%. Hence, it is not strange that mortgage holders continue to make moves to find better conditions for their home loans or try to pay off the last installments to get rid of the debt. The sum of cancellations and registration changes accumulates in Navarra in the first five months of the year 2,510 operations while new signatures remain at 2,098. For specialists in
Caixabank Research The fact that the impact of the increase in interest rates is being stronger on the mortgage market than on housing demand reflects that a significant proportion of buyers do not need external financing to access home ownership. However, in their latest sectoral report signed among others
Enrique Fernandez, chief economist, the entity anticipates in the coming quarters “a notable adjustment in the number of sales compared to the high records of 2022 and a slowdown in the growth of housing prices, especially in 2024, in a context of interest rates. high interest rates for longer.” After the latest revision of its forecasts, the study center estimates that sales and purchases will decrease considerably in the country as a whole in the coming months, to close to 500,000 in 2023 as a whole, a figure similar to that recorded in 2019 but a 23% lower than in 2022 (650,000)
Among the factors that, he maintains, will continue to support the sector and that make a strong correction like the one experienced between 2008 and 2013 unlikely, include a “resilient” labor market, falling inflation, wages with more dynamic growth and immigration flows. “significant”.
The pace in the purchase and sale of new homes continues
More than a third of the homes that have been purchased this year in
Navarra they’re new. Specifically, according to data published by the
Navarra Statistical InstituteAs of June, 1,230 purchase and sale operations have been closed, only three less than in the same period of 2022 and an evolution that has prevented the decline in the pace of sales, which has affected the second-hand market, which has fallen. 4.4%, was higher.
Although second-hand continues to lead the buying and selling market in the community and almost 65% of the properties that have been acquired this year belong to this segment, in the national classification Navarra is very far from the top positions, occupied by Estremadura y cantabria where nearly nine out of every ten properties sold are second-hand.
As is usually the case, the price of second-hand housing in Navarra is lower than that of newly built housing. According to the latest statistics of
College of Registrars, while used housing closed the first quarter of the year with a price per square meter of registered homes of 1,755 euros, which rose 4.3% compared to the previous quarter, new housing stood at 2,045 euros in that period, 5.8% more. Experts agree that the second half of the year will be key to evaluate the degree of resistance of the sector in the face of the sharp increase in interest rates and the weakening of the
economy.
“RESILIENT” PRICE
Caixabank Research reasons in its latest report on the real estate sector that “the greater resilience of demand, especially foreign demand, the shortage of supply of new construction housing and high construction costs have been supporting housing prices in recent quarters despite the sharp increase in interest rates. “All the autonomous communities show a positive interannual variation rate in housing prices in the first quarter, although the pace of growth continues to be very heterogeneous.”
In its real estate analysis, the entity emphasizes the recent evolution of the housing rental market, a market that has attracted a lot of attention in recent times due to the sharp rise in rental prices, much higher than the increase in work income. An issue that has increased concern about the difficulties it poses for the emancipation of young people and the greater economic vulnerability of many of the households that live in rent. “To address this situation, no effort should be spared to increase the supply of affordable housing,” he concludes.
Demand for real estate by foreigners grows
The demand for housing by foreigners had exceptional behavior in Spain after the pandemic. In 2022, foreigners bought 90,000 homes in Spain, 46% more than in 2021. And, in line with these good records, the number of home mortgages taken out by foreigners also increased to exceed 30,500, 33% more than in 2021. A trend from which the Provincial Community is also benefiting, where More than 7% of the sales transmitted in the first quarter of the year were signed by foreign citizens, when before the pandemic they barely exceeded 4%.
According to experts from
Caixabank Research In its report on the real estate sector, foreign residents usually buy homes and take out mortgages for an amount similar to that of Spaniards. On the other hand, non-resident foreigners tend to opt for more expensive homes and, consequently, the average mortgage amount of foreigners is higher, although there are notable differences depending on nationality and autonomous communities.
Due to their high amount, foreign mortgages in the Balearic Islands stand out, and in terms of nationality, Swedes and Americans are the ones who tend to get into the most debt. In Navarra, the average amount of foreign mortgages rose to 111,829 euros in 2022, which represents an increase of 22% compared to the figures before the pandemic. For
Caixabank Research, the resilience of buying and selling by foreigners in the face of rising interest rates will support the evolution of housing prices in tourist municipalities. He explains that an essential factor that explains this resilience is that foreign buyers have less dependence on external financing. “Many of them (especially non-residents) usually finance the purchase with their own funds, as an investment. In this sense, in tourist areas where non-resident foreigners predominate, who tend to buy high-value homes, greater strength in demand is expected and, consequently, greater resilience in the price of housing in the current context. of generalized slowdown due to the increase in interest rates.”
FIGURES
375 New mortgages They were signed in May in Navarra. On the contrary, that month there were 473 cancellations and 37 registration changes.
132.368€. It is the amount of new mortgages on housing that increases by 2.5% compared to the previous month.
94.9 million. Borrowed capital for new mortgages established in May in the community, 30% higher than that registered in the same month of 2022.
658.Home purchases and sales were registered in Navarra’s property registries in June, which represents an increase of 5.1% in annual terms and 6.8% compared to the previous month.
11,9%. This is the percentage by which the purchase and sale of subsidized housing has decreased in Navarra in the last year.
103 m2. Average surface area of housing registered in the community during the first quarter of the year.
69%. Of the sales that have been carried out this year, they correspond to properties with a surface area greater than 80 m2.
1.314€. Amount of mortgage credit contracted in Navarra per m2 of housing purchased in the first quarter.
82.Housing began in July in the community, all free. It is almost 25% less than the figure registered in the same month of 2022 when there were 109. 96 homes were completed, 18.6% less than a year ago.
