CaixaBank, one of Spain’s biggest banks, forecasts that house prices will rise 4% next year in part due to the soaring cost of building materials.
In its annual report on the Spanish housing market CaixaBank details how home sales have surged this year to over 545,000, the highest level since 2008, with new home sale completions at the highest level since 2012. Housing starts, however, remained stable at around 100,000, similar to 2018 and 2019.
According to figures cited in the report from Eurostat, the EU statistics office, construction costs have risen 12% this year, and by more than 15% in some categories. At the same time, global supply chain bottlenecks have delayed the delivery of vital building materials such as timber, aluminium, and steel, leading to delays in completion.
The report by CaixaBank explains how Spanish house prices originally fell in 2020 after the pandemic struck, but turned around in 2021, and are now above their pre-pandemic level. The bank expects house prices to continue rising, and end next year 4% higher on average, with regional differences.
The rising cost of building new homes will encourage developers to increase their prices, and higher new home prices will exert upward pressure on the whole market.
The report also reveals that rental prices have declined in 65% of provinces and 55% of municipalities in the last year, especially in tourist areas.