The coronavirus supposed from the year 2020 the beginning of a ‘global fever’ to buy houses that has taken the indicators of sales, mortgages and prices to levels that have not been recorded for years. A full-fledged boom or bubble. Again.
In the United States, the cost of sales has skyrocketed by an average of 35% since the start of the pandemic, according to data from the specialized portal Zillow. In Spain, in the 2021 Supervisory Report, The Bank of Spain points out that house prices are increasing, for the euro area as a whole, at a faster rate since 2005.
In some countries there are clear signs that these are above their long-term equilibrium value, while mortgage lending standards are deteriorating. On ‘alert’ would be France, Germany, Austria, Switzerland, the Netherlands, Croatia, Hungary, Liechtenstein or Slovakia.
In Spain, the year 2022 has been the best January since 2008 in terms of home sales for the first time, according to the INE. 69.1% of the 52,684 transactions in January had a natural person as buyer and seller, while 21.1% had a legal person as transferor and an individual as buyer. The rest of the market (9.8%) is divided between operations in which an individual is the seller and a legal person is the buyer (4.1%) and those in which both are companies (5.7%).
The danger of the consequences of war
The real risk is that the war in Ukraine, its consequences such as inflation and the slowdown in the economy in Europe, will have a direct impact on the ability of families and companies to meet debts. That will burst the bubble unexpectedly.
According to The world“I don’t think that prices fell sharply in the United States because the strength of its economy is greater, although I do think that we could see considerable cooling. In Europe, however, the situation seems worse and more worrying to me, especially in countries like Germany or the United Kingdom.”
The figures in Spain
-Sales set a record in 2021 with 564,569 operations, the best data in the last 14 years
-Mortgages have recovered the levels of the boom and prices accumulate two years of increases.
What to watch closely is the rise in interest rates in a situation of inflation like the one we are in. A stoppage in the market is not expected, but “a moderation of the upward cycle is, affirms Raymond Torres, director of the International Economy and Situation at Funcas.
Experts believe that Spain is going to a housing market coolingwith a slowdown but that is not going to look like the 2008 crisis, according to Bankinter, “the situation is not worrying as in 2008 because the average effort rate in the country is around 30%, below 35% that activates the alarms, prices are still 11% below the maximum of 2007 and a large part of the mortgages that have been granted are at a fixed rate, which protects buyers against the rise in the Euribor”.