Com. Valenciana leads cash purchases of houses in 2023

In 2023, the real estate market experienced a double-digit decrease in property transactions. But with over 640,400 operations finalised before a notary, it still marks the fourth-best figure since 2007.

Surprisingly, more than half of these transactions (56.2%) were completed without a mortgage, with the Community of Valencia leading the pack at 70.2%. This autonomy solidifies its position as the second-largest market in Spain for home sales, only trailing behind Andalusia.

Throughout 2023, 640,451 property transactions were formalised across Spain, representing an 11.2% year-on-year decrease. Concurrently, 280,340 mortgage loans were constituted, marking a significant 21.3% plummet compared to 2022, according to the Notarial Statistics from the General Council of Notaries.

Nevertheless, the average price of sold houses continued to rise, reaching €1,640 per square meter by the end of the year, reflecting an average 1.5% year-on-year increase.

Despite the downturn in transaction percentages, 2023 stands out as one of the best years for property transactions in the last 17 years. Ranking as the fourth-best annual result since 2007, surpassing pre-pandemic figures (2017-2019) and nearly doubling the figures from the worst years of the previous economic crisis (2011-2014).

The current economic uncertainty, coupled with the European Central Bank's intervention to curb inflation by increasing interest rates, hasn't favored mortgage loan approvals for property purchases. Consequently, the surge in the Euribor has made financing more expensive for both variable and fixed-rate mortgages.

This has been one of the primary causes behind the decline in the residential real estate market. However, the reality is that the decline was much less severe than anticipated. A notable 56.2% of transactions didn't necessitate a mortgage loan, according to notarial data.

Out of the 640,400 transactions, only 280,340 were completed with a mortgage, accounting for 43.8% of the total transactions in 2023. Regions like the Basque Country (68.1%), Madrid (67.2%), and Navarra (53.1%) witnessed more transactions with mortgages. However, Catalonia (48.8%) and La Rioja (48.7%) also surpassed the national average.

Conversely, in other autonomous communities, property purchases without mortgage financing prevailed. The Community of Valencia stood out with 70.2% of acquisitions made without a mortgage, followed by Murcia (67.2%), Castilla-La Mancha (65.7%), and Castilla y León (64%). Regions like Asturias, Canarias, Cantabria, and Galicia also saw over 60% of purchases made without mortgages.

Apartments continue to dominate property purchases, accounting for 76.9% of total transactions, with 492,498 transactions recorded last year. In 2007, during the peak of the housing market, over 675,000 apartments were transacted. Conversely, in 2013, amidst the housing market slump, transactions barely surpassed 247,000 units, almost a third of the boom period. However, the median of the historical series stands at 400,561 apartment sales, a figure surpassed in 2023.

Regionally, the Community of Valencia retained its position as the second-largest autonomous community in terms of property transactions, with over 104,830 transactions, trailing only behind Andalusia (126,430). The battle for second place between Catalonia and the Community of Valencia continues annually, with Andalusia maintaining its lead.

While the trend in apartment sales remains consistent, the situation slightly differs for single-family home transactions, with Madrid slipping to the sixth position. Andalusia, the Community of Valencia, and Catalonia lead in single-family home transactions, followed by Castilla-La Mancha and Castilla y León.

2023 confirmed the end of the boom experienced in 2020 and 2021, following the worst phase of the pandemic, during which single-family home purchases reached 25% of the market share, the highest since 2007. Over the past two years, the volume of house sales has decreased to 23.1% of total transactions.

In all autonomous communities, the proportion of apartment sales increased in 2023, except in Andalusia (72.2%) and Castilla y León (68.9%), albeit less than the previous year. The regions with the highest volume of apartment sales relative to their total transactions were the Basque Country (93.1%), Madrid (88.5%), La Rioja (85.8%), and Navarra (82.2%).

Conversely, regions with a higher proportion of single-family home sales in 2023 included Castilla-La Mancha (37.4%), Extremadura (34.1%), Murcia (33.3%), and Castilla y León (31.1%).

In summary, the real estate market in 2023 showcased various dynamics, with cash purchases gaining prominence amidst a decline in mortgage approvals. The preference for apartments remains strong, while the trend for single-family homes witnessed fluctuations across different regions.

Sources:
Idealista