Different economic fluctuations influence different sectors such as real estate. This is why both buyers and sellers of homes are wondering if it is better to make these transactions now or wait until 2023. What to do?
In general, and when it comes to buying a home, many agents feel that despite the current circumstances, now is a good time. Francisco Sierra, General Manager of Casavo in Spain and Portugalindicates that, if we analyze the historical correlation between Euribor and trading, the rise in interest rates does not have a great impact on the number of transactions.
“We believe that 2022 will continue to be a good year to buy property, as the measures promoted by the ECB to contain inflation will be offset by increased activity from private and institutional investors.” She points out that, despite the fact that, as some reports point out, 2023 will be a year marked by a 15% drop in sales, the real estate market will stabilize, “as the impact of rising rates will have an impact on the short term, improving future prospects”.
For its part, Jesús Duque, Vice President of Alfa Real Estate, states that over the next six months the economy could cool down, derived from the war in Ukraine and all the events it has generated in the global economy. Moreover, the ECB’s decision to raise interest rates by 0.75%, the largest increase in the history of the euro zone and, not only, “but we have already warned that this is only the first of the next increases”.
For the expert, those who want to buy must realistically assess whether a future increase in mortgage loans could have a very negative impact on their financial situation. And evaluate which of the two options you prefer, buy at a higher price and at lower interest rates or vice versa.
Ernesto Ferrer-Bonsoms, Real Estate Director of Intrum Spain and Commercial Director of Solvia, declares that, in the case of wanting to buy, the best time is now if we are going to seek financing; as interest rates are expected to continue to rise in the coming months. “The rise in interest rates by the European Central Bank will affect a large part of consumer credit, including many mortgages. Additionally, due to the lack of supply, prices will likely continue to rise, albeit more moderately than in recent times.”
If I want to sell, is it better now or later?
Jesús Duque explains that in the coming months we will be able to observe more difficulties in accessing a mortgage loan, higher rates and, in some cases, greater doubts in the labor market. “My opinion is that anyone who can sell now, and can’t or won’t wait a year or two to sell, should do so now.”
When analyzing a sale, from Casavo, remember that We are in a particularly favorable moment for the sale of real estatesince increases in interest rates moderately increase the number of buying and selling transactions, which they believe will occur in the third quarter of the year.
As for 2023, Casavo foresees an improvement in the sustainability of the real estate sector, motivated by the measures currently promoted to contain inflation, the effects of which we will begin to observe in the medium or long term. “This is why when we talk about the best time to sell a house, we must emphasize that we are at a particularly favorable moment for this one, which will continue throughout 2023 due to the current economic context, which drives sales in the face of rising credit, the fight against inflation and the securing of real estate as an investment”.
What will happen in 2023?
At Alfa Inmobiliaria, its vice-president estimates that probably in 2023 there will be better offers and lower purchase prices, but also many families will find it more difficult to access a mortgage, and the interest will certainly be higher. “This price drop may be short-lived.”
He recommends that, especially for people considering a fixed-rate mortgage, it’s best to buy now, even though it will likely be possible to find slightly lower prices in a few months.
According to the housing price index published by the National Institute of Statistics (INE), housing in Spain has accumulated 33 consecutive months of growth. This is nothing but a response to the bullish trend that has marked the growth of the sector globally. Francisco Sierra, managing director of Casavo in Spain and Portugal, believes that the rise of the Euribor to its highest level since November 2011 (2.07%) will be decisive for house prices for next year.
According to the analyzes carried out by Casavo, the rise in housing prices due to the influence of inflation will be offset by the measures promoted by the European institutions to combat this economic situation, leading to a very positive scenario in the medium and long term. “Given the market moves, we expect higher interest rates to be accompanied by a slight increase in sales, as housing becomes a ‘safe haven’ in the face of uncertainty.”
Although the expert specifies that the development and growth in the number of commercial operations will be accompanied by a reduction in supply at the start of 2023. However, they believe that these are common movements in the market that help to improve the dynamics that guarantee the sustainability of the sector.