Spanish housing Prices Show No Sign of Correction Amidst Supply Shortage
Madrid, Spain – Housing prices in Spain continue to climb, reaching all-time highs, with no widespread correction anticipated unless a critical supply shortage is addressed, according to recent analysis. The average price of free housing rose 12.1% in the third quarter of 2023, disproportionately impacting those with limited financial resources.
Ferran Font, Studio Director of stories.com, attributes the sustained price increases to a “structural tension” within the sector. “The sector is dominated by structural tension: with solid and growing demand, but with a supply that is unable to close the gap,” Font stated. He warns that failure to rectify this deficit will lead to increasing residential exclusion.
The current market tension is already pushing demand towards more peripheral areas, located 30 minutes to an hour outside major city centers. While a “bonanza in the market especially due to rates” is expected to moderate price increases to 7.8% by 2026, and a potential easing of the mortgage boom is anticipated next year, Font emphasizes that “the rise in housing prices persists…but no signs of generalized correction as long as supply does not grow.”
The ongoing shortage particularly disadvantages young peopel, who “are forced to fight against a more solvent profile” and often rely on loans, gifts, or inheritances to enter the housing market. Despite a recent uptick in new growth projects, Font notes that “the residential deficit persists, and as long as it is so significant, it will be unfeasible to alleviate the pressure on prices.”
