Why prices won’t fall after the pandemic – CVBJ

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Effects of the coronavirus on the industry

Updated on Saturday, December 11th, 2021 – 1:55 AM

Prices rose 4.2% in the third quarter of the year and experts believe that the upward trend will continue as long as the surge in the market in recent months will continue

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The housing market has the impact of pandemic. Sales and mortgages are seeing record increases every month, adding to those numbers yesterday the prices that were in the third quarter 4.2% more than in the previous year, the greatest advance in the past two years.

The data, taken from Property price index (IPV) of the National Institute of Statistics (INE) reflects not only the dynamism that brick is experiencing in Spain, but also a change in the upward trend as a result of this bubbling activity. “It’s a significant increase, in line with the huge demand for home buying that has sprung up following the effects of Covid-19 in Spain and that we’ve seen channeling very well since the beginning of the year.” Step with closed purchases, ”he says Mara Matos, Director of Studies and spokesman for the real estate portal Fotocasa.

Their projections suggest that as long as the tone of the market stays the same as in the past few months, the trend will continue. “As long as this intensity continues in the market, it is possible that prices will continue to rise, although We don’t expect these promotions to be very steep“, Adds the expert.

In other words, house prices have shown no signs of falling in the months ahead, and there are several factors that explain why this is so. On the one hand the high demand from buyers faced with the need and desire to look for houses that are more spacious, brighter and away from urban centers that suit their needs.

“People’s living preferences have changed, which means that we value living more than ever,” adds Matos.

On the other hand is that Profitability through real estate wealth, especially in an inflationary context in which price increases make most financial assets less attractive – and performance – less. The brick, in turn, shows its refuge character and, depending on the source, also generates returns They average between 5% and 7% across Spain.

The final factor that sustains the rise in prices is the attractive ones Financing terms Banks in granting mortgage loans. The tremendous liquidity provided by central banks to deal with the pandemic, and interest rates at historic lows, are encouraging companies to keep the mortgage faucet active.

Possible bubble?

Despite these numbers, they dispel doubts in the industry about a potential real estate bubble similar to that of the first decade of the century. “The IPV data show a rate of increase that is below the CPI. Despite the sharp rise in the number of purchases and mortgages, the moderate price development confirms that far from overheating or heading for a new bubble, the market is emerging from the pandemic and is at the level it would have been if it hadn’t been through the health crisis, ”he points out Francisco Iareta, Spokesman for the property portal Idealista.

The prices for the sale of homes have already increased by 30 quarters compared to the previous year. Restraints and uncertainty during the worst months of the pandemic smoothed the increase to 0.9% in the first quarter of 2021, the lowest rate in seven years, but that was also a tipping point.

Back in the third quarter of this year, the annual new construction rate fell by almost two points to 4.1%, while the spread for used apartments was 4.3%, almost one and a half points above the average. registered in the previous quarter. Quarterly, the general HPI fluctuated 2.1% between July and September, while new home prices rose 2.8% compared to 1.9% for second-rate apartments. Hand.

for CommunitiesAll autonomous regions had positive inter-annual rates and were above those of the previous quarter, with the exception of the Basque Country, which lowered them by 1.2 points to 1.4%. The strongest increases in the annual rate were recorded in La Rioja, Andalusia and Galicia with increases of 2.8, 2.4 and 2.3 points, respectively.

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