How will inflation affect real estate in the upcoming months?

28/09/2022

During the first six months of the year, the outbreak of the war and the recent interest rate increase by the European Central Bank were just a couple of the events that have put the sector’s resilience to the test. In fact, within this context the purchases and sales of second-hand homes, which represent an important role in this panorama, were close to 270,000 operations, according to the INE (National Institute of Statistics).

The second half of the year is still a question mark. For this period, the annual rate of change of the CPI became key, leading to a moderation in real estate operations after ending at 10.8% in July, six tenths higher than what was recorded in June, according to the INE.

The experts at Huspy, a specialized PropTech, think that inflation is going to be a “determining factor” in the second half of 2022, given that the purchasing power of buyers depends on it. Inflation will increase the price of homes, linked to the high degree of uncertainty that inflation involves.

According to Huspy, these high prices in property, marked by the dynamics of demand, will begin to drop during the last part of 2022. Likewise, the upcoming months will see mortgages become more expensive, together with longer sales periods.

Banks will require more demanding conditions for granting these kinds of loans, thereby slowing the upward trend in the number of purchase and sale transactions recorded as of today’s date. This forecast is due to the fact that the number of people who’ll be able to purchase a property will be diminished because of the current panorama.

Other factors on which the stabilization of inflation will depend are the price of energy and the price of raw materials, which are especially applicable in new construction in the real estate sector. Regarding this point, the importance of the actions by governments to achieve market stabilization should be noted.

Thus, the real estate sector continues to be strengthened, despite the difficulties and challenges represented by variables such as inflation and the related uncertainty, and the sector adapts to new challenges and trends and is capable of offering a simple purchase and sale experience.

News taken from Brainsre.news

28/09/2022

Recent posts

Categories

Share

MAGNAREM
Do you have doubts about
We help you