Publications

The Community of Madrid maintains high growth but faces a slowdown with less momentum from services, both in tourism and the rest. Employment and consumption are sustaining economic activity, though challenges remain in the housing and productivity sectors.

The Spanish real estate market is entering a phase of forced maturity. Sales are slowing, not because there is a lack of buyers, but because of limited supply. The paradox is obvious: The economy is growing, employment remains strong and credit is flowing, but buying a home is becoming increasingly difficult.

The fact that there is not enough affordable housing in Spain right now is not up for debate. However, as last week’s proposals show, not everyone agrees on the solution.

The housing sector is in a deceleration phase: low sales, high cancellations, and increased finished inventories. Certainty about VIS subsidies, reduced interest rates, and improved household financial balances will aid recovery, expected to be slow, gradual, and solidified by 2025.

December's inflation increased to 3.4%, driven by a monthly variation of 0.3%. At 3.9%, core inflation rose by 0.3% month-on-month, influenced by used cars and shelter; the latter remains a key factor for the expected decline in inflation in the coming months.

Going forward, the real estate market will be exposed to factors that will put negative pressure on demand. For example, interest rates are expected to continue rising and the 12-month Euribor is expected to stabilize above 4% and remain there for much of 2023 and 2024.

Home sales have been rallying since the second half of 2020, yet supply is barely growing. If the factors behind the sector’s sluggish recovery are not promptly addressed, the resulting pressure will push prices even higher.