Housing rose 4.5% in the third quarter due to the rally in new construction prices

It goes on and on for housing prices in Spain, with a market that is increasingly showing signs of cooling as the economy puts on the brakes. The most intense increase in new construction in sixteen years, of 11%, caused an increase in the average price of housing of 4.5% in the third quarter of this year in relation to the same period last year, according to the data The National Institute of Statistics (INE) published this Tuesday.

The Housing Price Index (IPV) confirms that properties have been increasing for thirty-eight consecutive quarters in Spain. Between July and September, this increase in housing prices has coexisted with an increase in financing costs, both in the supply of variable and fixed mortgages, due to the increase in interest rates that the Bank has been applying. European Central Bank (ECB) to control inflation. In fact, the 12-month Euribor closed the quarter at 4,149%, touching record levels from November 2008.

That 11% increase in newly built homes between July and September means that prices accelerated their increase by more than three points in relation to the previous quarter. The cost of used homes also rose in year-on-year terms, although at a much lower rate, 3.2%, and has been happening uninterruptedly since 2014. If the comparison is made with the previous quarter, used homes rose by 2.2% and the new one increased by 4.1%, so on average housing became more expensive by 2.5%.

The map of increases offers important differences by territory. Thus, the largest year-on-year increases in house prices were recorded in Navarra (7.6%), the Canary Islands (6.6%) and Cantabria (5.9%), while on the opposite side were Castilla La Mancha ( 1%), Extremadura (1.1%) and La Rioja (1.9%).

The Euribor puts on the brakes and the bank moves

As the end of the year approaches, the situation has changed somewhat. The fact that the ECB decided to put the brakes on rate increases has allowed the Euribor to relax and set half-year lows at the start of December. This has begun to cause movements in the banking sector, which has begun to modify the conditions of its mortgages in order to attract new clients, given the weakness in demand for loans. The mortgage credit firm sank another 29.6% in September and has accumulated eight consecutive months of decline.

All in all, in a context in which the labor market is resisting, but showing less and less vigor, entities perceive a greater risk in renegotiations in an environment of increasing defaults and this has caused the price of this type of operations to have decreased. shot. According to the Bank of Spain, the TEDR interest rate (which excludes expenses such as commissions or insurance premiums) approached the 5% level in October, standing at 4.72%. They are 13 basis points more than in September, and almost one percentage point compared to the rates applied on new mortgages, which constitutes a record distance.