Bank of Spain anticipates that investment in housing will continue to slow down in the coming quarters

Notes a loss of dynamism in the third quarter of this year

MADRID, 9 Oct. (EUROPA PRESS) -

The Bank of Spain has warned that the slowdown in housing investment that has been seen since the third quarter of 2022 may continue for the rest of the year and into the first quarters of 2023.

In light of the rise in bank credit, the loss of dynamism in new construction permits and the cost increases in construction materials, the Bank of Spain forecasts that the slowdown in housing investment will continue for the next quarters.

As explained in its latest 'Quarterly Report on the Spanish Economy', the slowdown that has been observed in recent months in the construction execution indicator would point to a certain slowdown in investment in housing in the third quarter, despite that home sales remain at levels much higher than those registered before the pandemic.

With regard to house prices, the Bank of Spain explains that their growth moderated slightly in the second quarter, although they continued to show notable year-on-year advances --8%, according to the National Institute of Statistics-- given the insufficiency supply to meet relatively strong demand.

According to the latest data published by the Ministry of Transport, Mobility and Urban Agenda, consulted by Europa Press, new construction permits reached 61,245 units between January and July, just 0.3% more than in the same period of 2021, when 61,051 visas were granted.

New construction permits granted in July alone stood at 8,869, the lowest figure for this month since 2017, when 8,326 units were granted, without taking into account data from the pandemic, with 6,673 visas granted in July 2020.

Several factors also suggest that the buoyancy of business investment may have moderated over the course of the third quarter, even though there may have been some improvement in the severity of supply shortages.

Among the factors, the agency points to the gradual tightening in the financing conditions of companies or the delay that would be occurring in the execution of investment projects associated with the European program 'Next Generation EU'.

On these funds, now the Bank of Spain estimates that they will arrive this year will be about 12,000 million, compared to the more than 20,000 million that it previously anticipated.