
The recent increase in interest rates to 4%, the highest level in the last 15 years, is having a significant impact on the real estate market in the Canary Islands. This hike has led to a rise in mortgage costs, increasing by more than 250 euros per month in annual reviews. Furthermore, it is expected that this upward trend will persist longer than initially anticipated, resulting in an accelerated cooling of the real estate sector.
At the beginning of 2023, the Canary Islands saw a positive trend in property transactions, with a 6% increase in January, totaling 2,166 operations, and a 29% growth in mortgages, with 1,386 loans granted. However, starting from February, both indicators entered negative territory on a year-on-year basis and have continued to decline in the last four months, with percentages of decrease surpassing two digits and accelerating month by month.
In May, the real estate market in the Canary Islands experienced a marked slowdown. Mortgages decreased by 43%, with only 1,021 loans closed on residential properties, compared to nearly 800 more mortgages granted in the same month of the previous year. Property transactions also decreased by 21%, with a total of 2,242 houses sold, as opposed to 2,828 in the previous year.
The Canary Islands are the most affected autonomous community, with mortgages on residential properties decreasing by almost 43%, while the national average saw a decline of 24%. Similarly, property sales have declined three times more in the Canary Islands (21%) compared to the 6.7% decrease in the national average.
Nationwide, a total of 42,311 mortgages on residential properties were closed in May, compared to 32,043 in the same month of the previous year, representing a reduction of approximately 10,200 operations.
In addition to the Canary Islands, other regions such as Galicia (-34.9%), La Rioja (-32.6%), Catalonia (-31.7%), the Balearic Islands (-30.7%), and Extremadura (-30.1%) have experienced a significant decline in property sales. On the other hand, only Melilla (230.0%), Cantabria (13.9%), and Asturias (12.8%) saw an increase in property transactions.
According to the Property Registrars, the slowdown in growth in the real estate market was observed throughout Spain in June 2022, following several months of sustained annual increases. Although only moderate declines have been seen in the last four months, the market continues to show a downward trend, with a 7.2% decrease in total transactions and a 6.7% decrease in home sales in May.