The Spanish real estate market cools month by month due to the sharp increase in the cost of credit that has brought with it the rise in interest rates with which the European Central Bank (ECB) tries to curb inflation. The rise in the Euribor has plunged mortgage granting by 18.8% in July in relation to the same month of the previous year to 27,693, well above the decline registered in the same month by home purchases (not all operations require financing), which fell by 11.4% to 45,630 operations.
According to the advance of provisional data from the ‘Real Estate Registry Statistics’, which was published this Monday by the College of Registrars, the number of total purchases (includes all types of properties, not just real estate) decreased by 8 in the seventh month of the year. .8% year-on-year, to reach 87,674, thus chaining eight consecutive months of declines.
The evolution of the number of mortgages constituted in recent months also shows a negative trend, with double-digit falls. In July, 36,356 mortgages were constituted on the total number of properties, 19.7% less than in the same months of 2022.
By province, the annual evolution of total purchases showed general interannual decreases, especially in Galicia (-17.8%), Navarra (-17.4%), the autonomous city of Melilla (-15.9%) and Madrid (-13.1%). Only in Murcia and Asturias were sales increases registered in July, with increases of 3% and 2.1%, respectively.
In relation to total mortgages constituted, the greatest year-on-year declines occurred in Cantabria (-38.1%), Melilla (-37%), Galicia (-36.3%), La Rioja (-28.8%), Castilla-La Mancha (-27.4%) and Catalonia (-24.2%). The only interannual increase was experienced by the Balearic Islands, with an increase of 13.6%.
The cooling of activity began in June of last year.
The Registrars explain that since June 2022 there has been a “slowdown” in the number of total purchases, which was preceded by significant sustained annual growth. That month there was already speculation about a change of direction in the ECB’s monetary policy, which, in fact, applied its first rate hike in eleven years just one month later, in July of last year.
In September of last year, there was the first drop in recent months, a slight drop of 0.7%, and although they rebounded gently for two consecutive months, the largest drop of the period was observed in December (-13.3% ). After a slight recovery in January, in the following months up to June there have been moderate falls, while in July the setbacks intensified, with total purchases falling 8.% and more sharply, 11.4%, those of housing.
Observing the constituted mortgages globally, a “descending trend similar to sales until December 2022” can be seen, having shown an intensification in its falls this year due to the restrictive effects of the sustained rises in interest rates. After a slight recovery in January, following the trend of purchases, half a consecutive year of progressive falls has been accumulated, with both modalities, total mortgages and housing, in negative values above the double digits of March.