Is it a good time to buy a home or is it better to wait?

The situation of economic uncertainty is clouding forecasts for the residential market, and the possibility that housing prices may start to fall may put a brake on purchasing decisions. But is it worth waiting for prices to fall in a scenario of rising interest rates? Will housing really become cheaper across the board?

According to financial analysts' estimates, this year is expected to close with an average housing price increase of between 5% and 7%. For next year, the trend does not really change. They all expect it to continue rising, albeit at a slower pace. Thus, they estimate that increases will be in the range of 1% and 1.7%.

We must not lose sight of the fact that these are average figures and it is true that the residential sector in Spain moves at different speeds in the different markets, with differences also existing between the second-hand product and new construction. In any case, the experts consulted by elEconomista.es do not expect housing prices to fall next year beyond specific opportunities or in markets with very low demand.

"Looking at the market with the expectation that prices will go down is not a good strategy," says Ricardo Sousa, CEO of Century 21 Spain and Portugal, who reminds us that "there is little supply and, therefore, fewer opportunities to find a house that meets the current needs of most Spaniards. As experts in this sector, our recommendation is that if there is a property on the market that meets the criteria sought, it would not be advisable to wait".

In addition, Sousa assures that "most of the transactions that the Spanish market is experiencing are a consequence of the changes that are taking place in the family structure. That is why, for many, the need to buy a house is not a question of whether or not it is the perfect time to buy, but rather it is a need that cannot wait".

Mikel Echavarren, CEO of Colliers, agrees that this is a "non-financially rational purchase" and recalls that "we have rates that are normalizing and are not alarming; what was exceptional were rates at 0% . Today is a better time to close a mortgage than in six months' time".

"We need to be aware that the era of free money pricing as we have seen in recent years is over," warns Beatriz Toribio, deputy general manager of Masteos in Spain.

"If we were thinking of buying our first home and we have a solvent profile, we can still benefit from interesting fixed-rate mortgage products. And if this is a new home, prices in this segment are not going to go down due to the scarce supply and the rising price of materials. And if it is second-hand and it is the house that we want and that we can afford, the moment should not condition us because the price of housing will moderate, but it will not fall".

In addition, Antonio de la Fuente, director of corporate finance at Colliers points out that "the Euribor rate has risen more than 30% and that is not what apartments are going to go down, not even in the best of cases. Whoever waits to buy a bargain will not pay for it as expected".

Mortgages on the rise

Cristina Arias, Director of Tinsa's Research Department, explains that the ECB's shift in monetary policy is gradually making mortgages more expensive, while at the same time encouraging financial institutions to tighten their risk criteria in the face of expectations of an economic slowdown, both factors that make access to financing more difficult for both demand and supply.

"Even so, the increase in interest rates is expected to moderate, as their capacity to control inflation generated largely on the supply side is limited. This, together with the fact that we are in a scenario of solvent residential demand, balanced debt ratios and new space preferences, means that, a priori, we expect a moderation in demand without a strong contraction".

When it is a purchase for investment, Toribio considers that in this case "they should think more about whether it is a good investment or not, rather than about the moment. Our savings in the bank lose value as inflation rises. That is why investment in housing is a refuge for savers, since it is a low-risk investment that we can make profitable by renting and that, in the medium and long term, in general terms, that property will have gained value".

Where will prices go up or down?

The evolution of housing prices is one of the factors to take into account when buying. In this case, Eduard Amorós Kern, Professor of Business at the International University of Valencia (VIU), stresses that its evolution "will depend on how the market behaves".

Thus, he points out that from the outset, we could speak of two types of market: "the first, in which there is more demand than supply, as is the case of large cities, the price is likely to remain unaffected, and there could even be the paradox that they continue to rise or remain the same, since the supply of housing is less than the demand. Real estate speculation is a fact that is very attractive to those who are making huge profits by buying and renting housing, and even individual rooms at very high prices. A second, of municipalities and areas where demand was very rickety and prices have not experienced a significant variation since the last real estate crisis, which could lead to a significant drop in prices".