Spanish housing market expands 8% in Q2, but the growth rate is cooling down

The amazing boom in home sales that set off after the pandemic is slowly cooling down, reveal the latest official figures.

There were 193,534 home sales in the second quarter, 8% more than the same time last year, according to figures just published by the Spanish government (MITMA).

Sales in the second quarter were the highest they have been since 2007, as illustrated by the chart above.

Home sales increased by 40% in the Canaries, 17% in the Valencia region, 13% in the Balearics, 9% in Andalusia, and 8% in Catalonia. However, sales fell by 5% in the Spanish capital Madrid.

The rate of growth in sales has been cooling down in recent months, falling from +36% in January to +4% in June. A slowdown was inevitable after the remarkable recovery that kicked  off in the wake of the pandemic, and has now delivered 18 consecutive months of growth.

With mortgage interest rates rising fast, and 50% of all sales involving mortgage financing, it is reasonable to expect sales to stop growing by the end of the year, if not before.

But, even if the post-pandemic Spanish housing boom does run out of steam this year, there is no reason to expect a crash like the end of the last boom in 2007. It will, however, get more difficult to sell property in Spain against a backdrop of recession, rising interest rates, and high inflation.

As always, some segments will do better than others.

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