With the cost of labour and construction materials on the rise due to a global supply shortage, the Bank of Spain has warned that house prices are on the increase and that the trend is likely to continue into next year.
The experts have confirmed that while the situation in Spain is a little more stable than in the rest of Europe, if costs to build continue to soar then this will have a direct effect on the housing market. The latest Financial Stability Report has shown that the real estate market in Spain experienced a strong rebound during the first eight months of 2021, increasing by almost 14% compared to the previous year, with demand far exceeding supply.
According to the bank, the resurgence has been driven not only by the economic recovery following the pandemic, but also by investments that were postponed in 2020 and by evolving preferences, with more families now opting for new constructions.
The upturn in purchases in 2021 translated into a year-on-year price increase of 3.3% in the second quarter of the year, with the cost of new builds rising by 6% and second-hand homes costing 2.9% more. The Bank of Spain has confirmed that, as house prices skyrocket, so does the cost of home loans: today, a mortgage for a new home is around 40% higher than it was during the same period in 2019.
Source: Spain News Today, November 2021