Spain's GDP growth forecast is maintained for 2023 (2.4%), revised downwards to 1.5% in 2024 and is expected to accelerate in 2025 (2.5%). The growth bias is negative due to the geopolitical context and uncertainty in EMU activity and economic policy measures.

Economic activity is expected to accelerate in 2025, in line with the recovery in the EMU. The tourism sector could have a greater capacity for growth. Inflation falls in line with expectations. Consumption could show moderate strength. The working-age population continues to increase, allowing for employment growth.

For 2024, we expect the economy’s growth rate to moderate to 1.4%. In the first chart we show the breakdown of this forecast according to its main determining factors.1 As can be seen, in the absence of external shocks we could have expected a growth rate of almost 2.5%, thanks in part to the support of European funds.

In the Spanish market, around 600,000 homes are sold annually, of which an average of 100,000 used to be new units. However, in 2023 there were 80,000 new homes, and the forecast for 2024 is around 60,000. So, Spain is one of the European countries that constructs the fewest homes per 1,000 inhabitants. Therefore, new housing will continue to be a scarce commodity, and even though sales will slow down due to mortgage accessibility, the market will not collapse due to the balance between supply and demand.

Property transactions may decrease by 10% in 2024, but the average purchase price is expected to rise between 1% and 3% (and January new forecast already predicted that prices of newly built properties will increase by 4.1% in the first semester of the year).

Here is a summary of the Spanish Real Estate Market Trends for 2024:

• Spain economic growth (higher than the EU average).
• Decrease in mortgage rates – growing optimism (=> more transactions =>higher prices).
• Limited offer (especially for newly built), including for rental.
• Price increase (to continue in the following years).
• Increase in buy-to-let investments.
• Record of foreign investors & buyers, including for repeat purchases.

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