What is the reason for the slowdown in housing price growth?
The events that shook the world at the beginning of the year have caused tangible damage to the world economy, and the consequences will be observed for quite a long time. Almost all segments of the market show a decline, which to some extent affects the economy of different countries. Spain has not been spared by the crisis, and there is a slowdown in housing prices.
It should be noted that experts predicted changes in the markets of the EU states even before the coronavirus epidemic. The reason for that was the new EU budget without significant investments of Great Britain, which left the commonwealth. Now, this factor was complemented by the outbreak of the disease, which swept around the world.
According to the results of the authoritative Standard & Poor’s agency, in Spain there is a slowdown in the pace of development of the residential real estate market, which is due to a decrease in the growth of the state economy. However, the cost of apartments and houses will still grow and will outpace the increase of salary.
This year, analysts are talking about a price increase in the segment of residential real estate by 4.2%. In 2021 the growth by 3.6% is expected, and in 2022 – by 3.2%. Despite these forecasts, experts calm down that the economic conditions for the development of Spain remain favorable, and there is no reason for panic or reduction in investment volumes. There are a number of problems in the country, first of all it can be seen in the reduction of jobs, which will continue in the current and next years. However, the Spanish market has just entered the stage of a stable economy, and all negative factors can be smoothed out.
The volume of investments into the real estate segment of the country has grown by 10% of GDP. At the same time, the demand is growing and the supply does not satisfy it. Problems with the lack of facilities in large Spanish cities, such as Madrid and Barcelona, are particularly noticeable. Therefore, one should not expect that housing prices will decrease here in the near future.
Slowdown of cost growth for objects is insignificant and the amount per square meter will still be higher than the salary, even despite its regular increase.
This situation will be observed not only in Spain. Many countries will survive such a slowdown. Besides, it is likely that the volume of investment in construction will decrease, which will affect the availability of housing.
However, not all countries will see a slowdown in the growth of real estate prices. Growth rates are forecasted in Ireland. Here last year there was an increase in price by 1%, and this year they promise a 2.5% growth in value. In Italy, the figures are more modest – in 2020 predict a jump of 0.5%, in 2021 – by 0.9%, in 2022 – by 1.5%. The UK real estate market is also actively developing.