Is it still a good time to invest in real estate?
In the first part of 2024, the market fundamentals have changed little compared to 2023. Nevertheless, it is worth asking whether it is still a good time to invest in real estate.
At first glance, it might seem that the residential real estate sector is cooling down. According to the General Council of Notaries, a total of 640,000 home sales were made in 2023. This figure represents a decrease of 11.2% compared to 2022. Additionally, the signing of mortgages to buy homes fell by 21.3%.
However, a closer examination reveals the causes of these declines. On one hand, the figures achieved in 2022 (and 2021) were recently record highs. It is normal that after historically high figures are recorded, there is a regression to the mean. That is, a return to levels closer to the historical average.
To this is added the issue of demand. According to Asprima, last year, 200,000 fewer homes were built in Spain than needed. The real estate developers’ association in Madrid points out that it is essential to increase housing production to correct the imbalance between supply and demand.
Housing prices, far from decreasing
It should also be noted that housing prices continue to rise. In January alone, the square meter increased by 7.5% annually, according to Fotocasa data. In 2023, housing prices rose by 5%, according to the appraiser Tinsa. And for 2024, experts are revising their forecasts upward. For example, CaixaBank, which now estimates a 3.5% increase for this year (compared to 1.4%).
That’s why, despite the decline in transactions and mortgages, “the answer is yes, it is a good time to invest” in real estate, explains our CEO, Diego Bestard. “But you have to see where: it’s not the same to invest in residential as in commercial… And then it’s also true that it’s not the same to invest in the center of Madrid or Barcelona or invest in coastal areas or second homes.”
Real estate investment will rebound in 2024
The initial estimates indicate that it is indeed a good time to invest in real estate. The consulting firm CBRE estimates that real estate investment in Spain will grow between 5% and 10% this year. Once again, the forecast of €12.5 billion in real estate investment in 2024 is far from the record levels of 2022 (over €17.6 billion), but it points to a clear recovery.