Real estate forecasts for 2023

What are the forecasts for the real estate market in 2023?

According to Juan-Galo Macià, President of Engel & Völkers Spain, Portugal and Andorra, 2022 has been a really good year, as our firm has managed to close a total of 760,000 transactions, which is 170,000 more than in 2021.

Looking ahead to this year, good figures are expected, but they may not be as dazzling as 2022 for several reasons.

• Firstly, as Constanza Maya, director of expansion and operations at Engel & Völkers for Spain, Portugal and Andorra, explains, there is a need for a match between supply and demand. This is not a simple matter, as nobody likes to accept that the value of their flat is lower than last year. And not everyone thinks that a property is special enough to pay more for it. Until this reality is adjusted, it will take a long time, and the situation will not be solved so easily.
  

• Secondly, it is expected that, once the situation stabilises, transactions will fall by 15%, transactions are expected to fall by 15%. The data obtained in 2023 will therefore not be as good as in 2022, but will still be equally positive.
  

• Thirdly, it is expected that, after transactions fall in number, the price of real estate will fall, property prices are expected to fall accordingly. However, demand is still much higher than supply.
  

What kind of demand will there be?

In general, there are two types of demand:

• On the one hand, those looking for a home to live in.

• On the other hand, those looking for an investment property.
  

The first type can be subdivided into three: young demand, improvement demand and high standing demand. Young demand is practically non-existent due to the macroeconomic situation we are currently experiencing, which leaves the youngest people out of the equation. The up-market demand is made up of buyers who have the capacity to afford a mortgage.

Meanwhile, there has been a slowdown in decision making by investors, as the current real estate market is very changeable and dynamic, and it is difficult to plan for the medium and long term. Therefore, before investing without guaranteeing success, they prefer to wait.

Forecasts 2023

What is expected for the luxury housing market this year?

Although we have outlined a forecast for the real estate sector for this year, it should be noted that the luxury market does not follow the same rules, rather, it moves under more independent and stable rules in the face of political and economic changes, as we have seen in the past year.

why does the premium segment set its own pace? This is because the person who buys a luxury home does not need financing to acquire it, as the standard home buyer does. This type of user does not usually depend on the granting of a mortgage and rate rises do not affect them. Therefore, the sale in these cases tends to have a more emotional and impulsive component, given that the client already lives in a premium area.

However, in this market, the supply of high quality homes is limited and demand remains high. Unlike the standard housing market, the valuation or technical appraisal of luxury real estate is more subjective because each property is unique and there are not many similar properties to compare with.

Establishing a fair and objective price for a luxury property is more difficult, and the owners of these properties have no need to sell quickly, allowing them to be more selective with buyers and unwilling to reduce their prices

Madrid, Mallorca, Marbella..
These will be the most in-demand destinations this year

By 2023, Mallorca, Madrid and Marbella are emerging as the perfect candidates to position themselves as the most active markets for luxury housing. These are also joined by areas such as Costa del Sol, Costa de la Luz, Malaga, the Canary Islands and the Balearic Islands. Barcelona continues to be the favourite destination for many investors due to all the advantages it offers: its coastal location but close to the mountains, the climate, the gastronomy, the powerful educational offer?

In short, 2023 will be a good year, although it will not reach the levels of 2022 or 2021. If we look at the long term, we will see that 2024 will be better than 2023.