The Euribor closed June at 3.65%, three-tenths below the May average and (more importantly) 0.35 points lower than a year ago, when it first exceeded 4% in 2013. this cycle of monetary austerityThis moderation of the reference index for the majority of loans means that those who review their payments annually will save around €370 over the next twelve months (if a variable rate mortgage of €150,000, repaid over 25 years, is taken as a reference, with a difference of 1% plus Euribor).
Those who renew their loans every six months also benefit from a small saving. This relief for the 'pockets' of families It's already happening in 2024. A trend that is relevant because we should not forget that in our country 70% of mortgages are variable, and that is changing to fixed-interest loans have been very complicated in this inflation crisis due to the opacity of the banks and the lack of competition, as they have admitted from the Minister of Economic Affairs, Carlos Bodyto (indirectly) the Vice President of the European Central Bank (ECB), Luis de Guindos.
In addition, new mortgages have of course also gradually become cheaper, which has minimally improved access to housing in Spain, while prices have remained sky-high, especially in the major capitals and main tourist destinations.
Particularly in these areas, the data shows a property market with overheated prices, affecting the majority of low-income households, and distorted by holiday rentals. A market in which the ECB's decision in July 2022 to aggressively increase official interest rates (which are automatically transferred to the Euribor) has not prevented house prices from continuing to rise and rise. This strategy was essentially aimed at making financing more expensive and thus suppressing demand for anti-inflation, with questionable results.
The ECB’s monetary austerity measures have been seen in mortgage lending, which has not stopped falling sharply (in interannual interest rates) month after month from 2023 to April 2024, the last period for which the INE has published data. But this credit contraction does not mean that there is no demand for housing. The only demand that has been suppressed is from households with lower incomes, who in many cases are trapped in an equally unaffordable rental market.
Prices and sales are rising
The hunger to buy and prices that do not decrease. The real estate market has shown no signs of exhaustion for months, apart from a small interruption in March due to Easter. In April, for example, the last month in which the INE published data, sales of apartments and houses shot up by 24%. In total, more than 53,000 properties changed hands during those 30 days.
This hunger for real estate is mainly concentrated in new-build apartments. That is why he sector demands more land from governments where to build, even if it is in Spain There are almost 450,000 new homes that are uninhabited and cannot find a buyer..
If you look at this data from April, the purchase and sale of new homes has increased by more than 31%, to 10,649 homes. Second-hand is growing a little slower, more than 22% compared to the same month in 2023, but still represents the majority of units sold, more than 42,000.
As for prices, there is no oxygen tank. Once again, the data published by the INE is months late. These are currently known for the first quarter of the year. Between January and March, the house price index (IPV) – a kind of brick CPI – rose by 2.1 points to 6.3%. Here too, there are differences that indicate the preference for becoming the owner of a new-build home. According to the INE, the IPV of these recently completed homes increased by more than 10% in the first quarter of this year, while the index for used homes remained at 5.7%.
It is these recently built properties that are pushing up prices and for this reason the sector wants to accelerate construction, because it understands that the 100,000 new apartments that come onto the market each year are not enough to meet the demand that is concentrated above all in the large urban areas of Madrid and Barcelona and in tourist areas. However, where the house price index published by the INE is growing the most is Andalusia (7.9%), Navarra (7.6%) and La Rioja (7.1%). While in the Community of Madrid it remained at 5.9% during the first quarter and in Catalonia at 5.6%.
It should be noted that in the field of housing there are disparate statistics, although they point in directions that mark a similar evolution and that indicate that in Spain there is more interest in buying houses than in other European markets. Thus, Eurostat will continue to be in the data at the end of 2023. According to the European statistical organisation, house prices in Spain rose by 4.3% at the end of last year. A fact that contrasts with the evolution in other Community countries, where interest rates are noticeable on the real estate market. Thus, in Germany, house prices fell by 7.1%; and in France by 3.6%. In Italy, they rose, but less than in Spain, 1.8%. And if you look at the Eurozone as a whole, house prices are falling by an average of 1.1%, which shows the strength of the brick market in Spain, despite a theoretically unfavourable economic context.
Proof that the brick sector in Spain is booming is the sale this Friday of the real estate portal Idealista for almost 3,000 million euros. A price that puts this real estate search engine for sale or for rent above what five companies on the selective Ibex 35 are worth.
Change in monetary policy
At the beginning of June the ECB began to reverse monetary cuts which has suffocated families with mortgages in recent months, with a first cut in interest rates to 4.25%, compared to the 4.5% where it has been maintained since the fall (a maximum since 2008). The Euribor has promoted this movement in recent months.
What is not clear is what the institution's board of directors will do at its next regular meetings in July and September, and whether this first drop in the official “price” of money will remain a symbolic act. This uncertainty is reflected in the mortgage index itself, which has slowed its pace of decline in recent weeks.
The situation is suffocating for the poorest families. This is evident from the latest Family Budget Survey (EPF).Based on data from 2023, the fifth poorest household in our country spends 41% of its total expenditure on housing, including facilities and calculating a 'rent that is allocated to the house in which the household lives when it owns or has the house itself ' assigned.”