José María Camarero
Sunday, 11 February 2024, 08:58
In the real estate market data for Spain in 2023 almost 60% of the operations formalised did not require any mortgage, according to the latest data from the country's general council of notaries (Consejo General del Notariado). The latest figures reveal that 42% of purchases in December required financing, compared to 58% that could be paid for in cash. This record month builds on a trend during 2023 when every month saw more cash purchases than financed ones.
The explanation for this situation is due to the large number of buyers who have the money at their disposal to buy a property. The buyers are generally large international funds that are buying up entire buildings; investors with available wealth who find opportunity and profitability in the sector; as well as foreign citizens willing to invest in a Spanish home.
This has put pressure on prices in such a way that, although fewer homes were sold in 2023 than the previous year, the cost of these has not fallen. In fact, the sale and purchase of homes in Spain fell by 11.2% last year compared to the previous year and the granting of new mortgage loans to buy a home fell by 21.3%. However, the average price per square metre increased by 1.5% year-on-year, to 1,640 euros on average.
It had been almost a decade since the Spanish property market had recorded more cash sales than mortgages, at the beginning of the recovery after the financial crisis. From 2011 to 2014, with the economy in recession, the few homes that were sold were paid for without a mortgage, because most of the population had no access to credit. Then, from 2015 until this year, that percentage has been growing to the current 40/60 split.
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