Housing market stalls on Costa with sales falling for third month in a row
The historic rise in the Euribor and the escalation of prices are being felt in the province: in the first quarter of 2023 some 15 per cent fewer sale contracts were signed
Wednesday, 24 May 2023
After three consecutive months of falling sales and two months with fewer mortgage applications, it is safe to say that the real estate market has changed its pace in Malaga province. This year has started with a cooling that experts blame on the historic rise in the Euribor and the escalation in house prices. In January, February and March there were year-on-year falls in the number of property transfers in the province (minus 12.5% in January, -5.8% in February and -16.4% in March), and on mortgage loans ( minus 11% in January and -17% in February). The figures are revealed in a report by the Spain's national statistics institute (INE).
If the numbers for the first three months of the year are added up, some 9,314 homes have been sold in the province, which is 1,619 fewer than in the same period in 2022 (14.8% less). This provincial decline in sales and purchases is much sharper than that which has occurred in the same period at national level (-2.5%).
The cooling of the real estate market affects both new and second-hand housing stock. In the case of new construction, the drop in sales is especially strong in Malaga province, reaching 29%, while in second-hand housing it is 10.4%.
"The forecasts continue to be confirmed and the market is tending to moderate," said Ferran Font, director of studies at the real estate portal Pisos.com. Font believes that the changing market will depend on "the evolution of inflation, the ECB's interest rate policy and possible rises in the Euribor and, in particular, the uncertainty generated by the implementation of the new Housing Law".
It should be remembered that the Euribor was still trading in negative territory at the beginning of last year and is now dangerously close to 4% (the provisional average for the month of May is 3.810%). The sharp rise in the indicator (to which most mortgages in Spain are referenced) coincides with a scenario in which wages have not risen at the same rate as inflation, causing a sharp decline in household purchasing power. The rise was barely 2.78% in wages agreed in collective agreements until December 2022, compared with an average inflation rate of 8.4% for the year. At the same time, in many areas, such as Malaga, the price of housing is at a record high after the sharp rise in recent years.
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