This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
Mark StücklinThe Spanish Mortgage Association (AHE) warns of a property-market slowdown later this year in the face of high inflation and rising interest rates.
The AHE, a trade body representing the Spanish mortgage industry, publishes a quarterly report reviewing the latest data, and looking ahead at what to expect from the market in the coming months.
In the latest report they suggest that high inflation, and rising interest rates to combat it, spell trouble for the post-pandemic boom in home sales that has seen double-digit growth almost every month since February 2021. In the chart below you can see the year-on-year growth in home sales over the last 12 months, with growth tailing off with each passing month.
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The latest figures from the National Institute of Statistics (INE) show mortgage lending up 50% in the first five months of the year, and up 25% in May alone, as borrowers rushed to take out mortgages before interest rates rise to head off inflation. Yesterday the European Central Bank raised interest rates by 0.5%, the first increase in 11 years. The ECB had announced it was going to raise interest rates by just 0.25%.
In its latest report, the AHE suggests, in very mild language, that the property market will cool down in the coming months, as high inflation and rising interest rates take their toll on consumer spending and investor confidence.
Richard La Ruina says:
-2% interest rate is more likely than a +2% interest rate. European government debt and weak economy can’t tolerate rates much above 0%.
Mark Stücklin says:
But then we get high inflation, and the Germans have bad memories of that…