Post by account_disabled on Mar 13, 2024 3:42:00 GMT -6
The Bank of Spain considers that, despite the increase in credit prices, housing prices will continue to show greater downward resistance than other variables in the residential market, such as sales or visas, due to the scarcity of new construction, the high costs of construction materials and the favorable financial situation of the different agents in this market.
This is clear from the report 'The mismatch between housing supply and demand, and its relationship with prices', published by the Bank of Spain, which warns that the current inflationary episode and the resulting tightening of policy monetary and, therefore, financing conditions are negatively affecting the dynamism of the housing market.
According to the agency, the median impact of an Phone Lead increase in the mortgage rate of 100 basis points (bp), a magnitude similar to the increase observed between the end of 2021 and the end of 2022, both on the variables of new construction and sales visas and on the prices, is negative and statistically significant.
For example, after eight quarters, the median impact on new construction permits and home sales would be, respectively, almost 11% and just over 3%, respectively. On the other hand, it is of a lower magnitude in the case of prices, slightly less than 2% after two years.
Looking ahead to the coming years, the Bank of Spain warns that the evolution of the relationship between housing supply and demand will be subject, especially, to the behavior of net migration flows. If the projections of the National Statistics Institute (INE) are fulfilled, which contemplate a significant increase in the number of households until 2024 , a prolongation of tension in some local markets can be expected. This volume of completed homes would be insufficient for the expected formation of households.
From the point of view of economic policy, given the aforementioned imbalance between housing supply and demand, it is advisable to review the management procedures for developable land so that housing production can respond more quickly to existing needs. .
The mismatch between supply and demand causes pressure on prices
According to the report, the demand for home ownership has recovered after the impact of the pandemic, with greater intensity than the supply, which is more rigid in the short term, which has translated into a certain imbalance between the two and upward pressures. about prices.
This is clear from the report 'The mismatch between housing supply and demand, and its relationship with prices', published by the Bank of Spain, which warns that the current inflationary episode and the resulting tightening of policy monetary and, therefore, financing conditions are negatively affecting the dynamism of the housing market.
According to the agency, the median impact of an Phone Lead increase in the mortgage rate of 100 basis points (bp), a magnitude similar to the increase observed between the end of 2021 and the end of 2022, both on the variables of new construction and sales visas and on the prices, is negative and statistically significant.
For example, after eight quarters, the median impact on new construction permits and home sales would be, respectively, almost 11% and just over 3%, respectively. On the other hand, it is of a lower magnitude in the case of prices, slightly less than 2% after two years.
Looking ahead to the coming years, the Bank of Spain warns that the evolution of the relationship between housing supply and demand will be subject, especially, to the behavior of net migration flows. If the projections of the National Statistics Institute (INE) are fulfilled, which contemplate a significant increase in the number of households until 2024 , a prolongation of tension in some local markets can be expected. This volume of completed homes would be insufficient for the expected formation of households.
From the point of view of economic policy, given the aforementioned imbalance between housing supply and demand, it is advisable to review the management procedures for developable land so that housing production can respond more quickly to existing needs. .
The mismatch between supply and demand causes pressure on prices
According to the report, the demand for home ownership has recovered after the impact of the pandemic, with greater intensity than the supply, which is more rigid in the short term, which has translated into a certain imbalance between the two and upward pressures. about prices.