New housing in the Basque Country rose in price by 12.3%, which was the biggest jump in 17 years.

The fact is that the supply of new housing to the market is still far below its potential. Market analysts recall that in 2008 the annual volume of apartment construction reached 14,000 units, and in 2022 it did not reach 5,000. The situation means that the demand for housing is not being responded to and the majority of sales are accounted for by secondary housing, which also leads to higher prices rent. Adding to the situation, as the same sources indicate, is the lack of land development that Euskadi suffers from.

Bubble highs

The evolution is not much different in the rest of Spain, where the average increase in house prices in the first quarter reached 6.3%. This is the largest recovery since the summer of 2022, when the sector collected all the demand accumulated during the quarantine. The fact is that the upward trend has been observed since 2014, according to the INE series. Apartments in new buildings also rose in price the most – by 10%.

With this evolution, market prices will reach bubble-era highs, even though far fewer businesses are closing than then. Experts agree on the reason for the appearance of this “rare bird” on the market: if fewer apartments are being sold, it is not because people do not want to buy; Rather, there is no longer enough supply to meet the entire demand of those people who can afford access to housing.

That’s why the reality of the market is that while interest rates remain high, it’s also putting upward pressure on mortgage rates – something that in other periods has been synonymous with lowering apartment prices to make them more attractive to sell – houses continue to be bought. And the prospect is that this trend will continue throughout 2024.