Housing is now the fourth concern of Spaniards according to the CIS. Price, Euribor and rising demand make it one of the most desired goods for families. GDP and CPI improve their expectations in Spain and the IMF insists "it is not 2008".
The International Monetary Fund (IMF) has improved growth expectations in Spain for 2023, specifically four tenths more, from 1.1% to 1.5%, while in 2024 we will grow by 2% instead of 2.4% as predicted last January.
With these data, Spain remains the leader of the Euro countries in terms of Gross Domestic Product (GDP) growth. If the Bank of Spain had already improved the forecasts, now the IMF emphasizes it and these data help to provide greater confidence to investors and analysts in a situation of economic and price uncertainty.
Will prices rise again this year?
The increase in costs and the rise in taxes and contributions of the self-employed is the main reason that forces many SMEs to raise prices again, according to the self-employed collective ATA. Almost 70% of the Spanish self-employed have had to increase the prices of their services or products in the face of the increases they themselves have suffered in their costs due to generalized inflation. And 65%, according to the latest ATA report, believe that they will have to raise their prices and rates again to alleviate these extraordinary expenses.
The biggest handicap for their businesses today, according to nearly 1,200 self-employed surveyed, is the rise in their costs, followed by increases in taxes and social security contributions for the self-employed. And the vicious circle of price increases may continue.
Not only life and prices are going up, with inflation, housing and rent are eating up an increasingly larger chunk of our salary, exceeding a third of our income in many cases. And hence the concern of the Spanish is increasingly focused on the price of renting and buying housing, and not only is headache of those young people of age of emancipation, also families are attentive to the fluctuations of the housing market for many reasons. Today, it is not only young people who are looking for a house, the market is changing and rent and mortgages continue to soar with a heterogeneous and thick demand. Today, six out of ten young people between the ages of 18 and 24 still live with their parents and have not emancipated themselves.
Why are Spaniards concerned about housing?
There are many reasons for housing to be a headache: shortage, variable mortgages and consecutive rate rises, lack of land, price, increase in the cost of materials and land, etc. Rate rises and the Euribor are complicating and worrying Spaniards, especially if we compare it with just a few years ago when in the CIS ranking it was the 16th reason on the list, while in the latest report it has been placed in fourth place.
However, the general situation of the economy and housing in particular, as many analysts have already warned, has nothing to do with the 2008 crisis and the subprime bubble.
The International Monetary Fund (IMF) itself, in the presentation of its Global Financial Stability Report, has made it abundantly clear; "it is not 2008" to state that the financial crisis has ended after the specific cases of some banking institutions such as Credit Suisse and, in the US, Silicon Valley Bank and Signature Bank.
Although the IMF recognizes that these specific cases have had another effect, "they have shaken market confidence and triggered important emergency responses by the authorities".
What has the Silicon Valley Bank and Credit Suisse cases provoked in the markets?
Simply a loss of confidence, as initial fears soon passed. The truth is that the rise in interest rates has put the entire international banking and financial system to the test, hence these 'scares'.
According to its report, the IMF forcefully insists that "it is not 2008" because bank supervisions today are much tougher and balance sheets more resilient. There are no latent imbalances and regulation does not allow for the serious failures that occurred then.
Today neither housing nor mortgages are at the epicenter of the economic situation as they were in 2008. "Financial crises have often been preceded by monetary tightening, but the latest episode of stress differs in important respects from the 2008 global financial crisis, the 1997 Asian financial crisis and the U.S. crisis of the 1980s. Although the current stress is directly in the banking system, the 2008 crisis spread rapidly from banks to non-banks. In addition, the 2008 crisis was triggered by credit losses caused by the housing market crash, while the current turmoil is partly due to unrealized losses in safe-haven portfolios."
According to the IMF, we are living in a situation that should not be compared with other times: "The current turmoil is also markedly different from the Asian financial crisis, when current account deficits and heavy external indebtedness exposed companies and banks to exchange rate and funding risks.