The real estate sector has started to show signs of recovery after more than a year of declines. According to the latest Real Estate Activity Index (IRAI), market activity grew by 0.8% year-on-year during the second quarter of 2024. This marks the end of five consecutive quarters of negative performance, giving hope for stability in the sector after a period of uncertainty.
What is the IRAI?
The IRAI is an indicator developed by the College of Registrars that offers a comprehensive view of the state of the real estate market. It combines both demand (reflected in property sale transactions and mortgages registered with the property registry) and supply (represented by business activity in the construction and housing sectors). This provides a complete picture of market behavior.
Factors Behind the Recovery
The 0.8% year-on-year increase is mainly attributed to two key factors:
- Rising housing prices: While the volume of sale transactions declined, property prices saw a significant increase, rising by more than 4.9%. This boosted the property index (demand), which grew by 0.65%.
- Increased business activity: The real estate and construction sectors recorded an average increase of 1.2%, which also contributed to the rise in the IRAI.
Slow but Steady Growth
This growth follows a difficult period for the real estate market. After eight quarters of growth, which gradually slowed, the index fell in the first quarter of 2023, coinciding with rising interest rates. The slight rebound in the second quarter of 2024 suggests that, while there are still challenges such as high interest rates, the market is showing signs of stabilization.
Quarterly Declines and Market Evolution
Despite the year-on-year growth, the index dropped by 2% compared to the previous quarter, reflecting the ongoing downward trend in the market. However, when adjusted for seasonal factors, the smoothed IRAI shows a slight quarterly growth of 0.15%, indicating a less pronounced slowdown.
Analysis of Demand and Supply
On the demand side, the number of property sales between April and June 2024 decreased, but this decline was offset by the increase in prices. However, the mortgage index fell by nearly 4%, reflecting the continued challenges buyers face due to the cost of loans.
On the supply side, activity in the construction sector contracted by 1.3%, and the combined construction and real estate sectors saw a decline of 1%.
Outlook for the Future
Despite this positive growth, registrars warn that real estate activity continues to show signs of slowing, a trend that began in the fourth quarter of 2022. However, the slight uptick in the second quarter of 2024 opens a window of optimism for the future of the market.
If you’re looking for a property in Sitges or its surroundings, now might be a good time to explore opportunities before the market fully recovers and prices continue to rise. At Living Sitges, we offer personalized advice to help you find the home of your dreams in this beautiful location. Feel free to contact us for more information!
This article is based on data from the College of Registrars and reflects current trends in the real estate market in Spain.
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