Tuesday, October 18, 2022

Despite rising interest rates and purchasing power crisis, Spanish real estate still appeals to Belgians

Rising energy prices and high interest rates on housing loans are not stopping Belgians from buying real estate in Spain. "Due to the high energy prices, we see that there are now customers who want to buy a Spanish property because in that country they have to spend less money on heating their home," notes Carl Vorsselmans of Nieuwbouw in Spanje


Figures from the economic observatory of the Spanish province of Alicante show that in the second quarter of this year, 805 Belgians bought a home in that region. That is 341 more than during the same period in 2021.

Notable increase

That's a striking increase, at a time when energy prices and interest rates are hitting high peaks. "It is mainly about new construction, whose sales agreements were concluded some time ago. Those transactions are not included in the statistics until the authentic deed is signed. That happens upon completion," Vorsselmans clarified in a comment to our editors. "So the figures give a somewhat distorted picture."

Vorsselmans does add that a new type of customer has emerged in the current situation. "Due to increased energy costs, more people are open to buying a second home in the southern country. This allows them to save on heating costs," he echoes. "On top of that, it is simply cheaper to live in Spain, which therefore ensures that people see their purchasing power increase when they stay in Spain."

Fear of even higher interest rates

The latest Real Estate Barometer from the notaries federation Fednot shows that rising interest rates are not currently halting rising real estate prices in our country. This is mainly because people are now taking out quick home loans for fear that interest rates will continue to rise. Vorsselmans comes to a similar conclusion when he looks at second home sales in Spain. "Historically, interest rates are still low. The uncertainty about how it will evolve further is now making many people switch," said the real estate agent.

The tightening monetary policy of the European Central Bank (ECB) certainly does not rule out a further rise in interest rates on residential loans. At the beginning of this year, the interest rate for a mortgage loan with a 25-year term and a quota (ratio of the loan amount to the purchase value of the home) higher than 80 percent reached about 1.8 percent, Immotheker's interest rate barometer shows. Today it is already 3.41 percent.

Source: Niels Saelens - Business AM