Housing markets ahead of the threat of recession

Housing markets ahead of the threat of recession

Fecha: septiembre 2022

Raymond Torres

Housing market

SEFO, Spanish and International Economic & Financial Outlook, V. 11 N.º 5 (September 2022)

Despite the drop in household income as a result of prevailing inflation, the housing market has remained dynamic: transaction volumes are up 20% so far this year and prices are tracking 8% higher. This atypical trend is attributable to the safe-haven appeal of housing at a time of rampant inflation, in addition to the savings accumulated during the pandemic and access to abundant financing. The current bull market may be reaching an inflection point, however, in light of the tighter monetary policy stance. Though we still expect prices to increase by around 6% on average this year, in line with our earlier estimate, a marked slowdown is predicted for next year. The market will not collapse, however, in light of the strong underlying demand and relatively healthy financial position of households. The main risk to that baseline scenario is not the formation of a bubble (as is the case in other countries), but rather the macroeconomic fallout from the energy crisis and general climate of uncertainty.

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