Real Estate optimism rises for the first time since 2022 on expectations of a rate cut

Sociedad de Tasacion has published a new edition of its Real Estate Trends Report, in which it analyses the evolution of the average price of new and used housing up to March 2024, as well as the performance of other ST indicators during the first quarter. The study concludes that the outlook for the real estate sector has improved during the first quarter of 2024, compared to the previous quarter, given the expectation that the European Central Bank may relax its monetary policy in the coming months.

The director of Institutions and Key Accounts at Sociedad de Tasacion, Consuelo Villanueva, explained that "despite the uncertainty that still prevails at a macroeconomic level, which is why we continue to face a scenario of credit restrictions and more expensive financing, optimism in the real estate sector has increased during the first quarter of 2024 due to the expectation that the European Central Bank (ECB) may begin to relax monetary policy, probably at the beginning of the second half of the year". "So much so that, by the time the first rate cut occurs, it is expected to have a positive impact on both real estate and mortgage activity volumes," he said.

 

 

Consuelo Villanueva said that "during the last quarter, financial institutions have made financing slightly cheaper, compared to the previous quarter, mainly for two reasons: due to the aforementioned expectation of lower interest rates, but also as part of their current strategy to improve the outstanding mortgage balance; consequently, this has slightly favoured the housing affordability index".

In turn, with regard to the price of new and used housing, the director of Institutions and Key Accounts at Sociedad de Tasacion pointed out that "the rate of growth continues to slow down, after four consecutive quarters of slight decelerations in year-on-year growth rates". "The real estate housing cycle continues to approach a new turning point, both in terms of real estate activity - the number of sales and purchases registered in the new and used housing market - and in terms of house prices, which reflect greater downward resistance, and which, where appropriate, are materialised through lower price increases", she concluded.

 

• The Real Estate Confidence Index reaches 49.1 out of 100 points during the first quarter of the year and breaks a six-quarter downward trend that began in 2022.
• 15 of the 17 autonomous regions recorded a quarterly increase in optimism in the first three months of the year, with Navarra (8%), Murcia (8%), Asturias (7.1%) and Madrid (7%) standing out.
• The housing affordability index improved by 2.7% compared to the previous quarter to 75 out of 100, also breaking away from the downward trend that began in 2021.
• The average price of new and used housing reached €1,868 per sqm in March 2024, after a year-on-year increase of 3.5%, compared to €1,852 per sqm at the end of December 2023.
• The speed of growth in new and used house prices remains stable, and Sociedad de Tasacion forecasts that the unit price will reach €1,883 per sqm in June 2024.
• The provinces where average house prices grew the most in year-on-year terms at the end of 2023 were Malaga (6.3%), the Balearic Islands (6.2%), Cadiz (5%), Tenerife (5%), and the Canary Islands (5%).
• The cost of new construction remains at peak levels at the end of the first quarter of 2024 with a unit cost of €1,270 per sqm, a year-on-year increase of +7.4%.

Full details of the last report can be checked at the following link: ST Sociedad de Tasación Quarterly Report First Quarter.