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Five Signs that Indicate a Slowdown in the Real Estate Market

Five Signs that Indicate a Slowdown in the Real Estate Market - Five Signs that Indicate a Slowdown in the Real Estate Market

After a period of uncertainty followed by one of growth with the pandemic and subsequent recovery, the forecast is a slowdown in the real estate market. In the current scenario, this circumstance does not suggest a crisis like 2008, but rather a much less drastic adjustment.

The real estate market experiences growth and standstill cycles regularly. In this way, a slowdown would enter into the logic of its evolution. What does it imply? That acting on impulse or panicking can have counterproductive effects.

What marks the slowdown in the real estate market?

In recent months, some circumstances have had a decisive influence on the real estate market. The symptoms of that slowdown are very different:

1. A moderation in price rising

Indeed, the price of housing has not stopped growing in recent months. According to data from the National Statistics Institute (INE), in the second quarter of 2022, the variation from year to year was 8%. However, it is already half a point lower than the previous quarter.

2. Selling times are longer

Another indication of a slowdown in the real estate market is that, although demand remains high, it takes longer to sell a house. Circumstances make buyers take longer to decide, and the market slows down.

3. Offer increase

Prices are moderating, and forecasts point to falls in the short term. To face this situation and overcome a possible cooling, we've seen a new trend lately in the property market: price reductions.

But those discounts do not mean losses. The high property demand and the insufficient offer to satisfy it have often resulted in higher prices than the actual property value. The goal now is to adapt those prices to reality.

4. Interest rates rise

Inflation has forced central banks to take measures like increasing interest rates. Twice so far this year, and it may occur once more in the coming months. And to this, we must add the unstoppable rise of the Euribor.

As the financing costs to buy a home increase, the operations also decrease. On the one hand, some buyers don't have enough purchasing power to buy: they're outside the market. On the other hand, those who still have purchase power take longer to decide.

5. Containment in the number of real estate transactions

It is another indication of the slowdown in the real estate market. According to reports from the General Council of Notaries, the sale of homes grew by 7.8% in interannual figures in August. The College of Registrars endorses these figures. But its latest analysis shows that in the second quarter of 2022, the number of sales fell by 0.2%. And, in the case of new housing, the fall is close to 14%.

Tips for coping with the downturn in the real estate market

It is still a seller's market, although forecasts force us to adjust expectations. For sellers, the recommendation would be to start with realistic prices to speed up the sale. Meanwhile, in the case of buyers, the idea would be choosing housing based on financial capacity, even if it means giving up some particular features.

Considering that this slowdown in the real estate market would mainly be an adjustment, it is still a convenient time to buy and sell. You have the opportunity to find your dream home or advertise your property for sale on Wait no more!

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