Data on price developments in the United Kingdom and market expectations in the main German cities seem to be the first signs of a downward adjustment in housing prices in 2023, as a result of the economic problems induced by the combined pandemic and war in Ukraine and increases in mortgage interest rates.

Although the situation in Spain is not comparable to the United Kingdom and Germany, Yes, it is our duty to analyze the places where prices will fall, in the event that this occurs. In fact, From @Uve Ratings we dare to affirm that, Prices will most likely stabilize at 2023 between a rise of 1% and a drop in 1% for the national team.

Let us remember that the real estate cycle that took place between 1996 y 2014, was characterized by an extraordinarily long duration and an exponential increase in home sales prices, that rose for the national team between 1996 y 2008 he 209% in nominal terms, as a result, mainly, of the injections of money into the market by financial entities that led to mortgage credit increasing by 557% between 1996 y 2008. The subsequent reduction of credits (and -34% between 2008 y 2014) led to a decline in housing prices 27,52%, between 2008 y 2014. The rise and fall of prices was general in all territories and, although they occurred with different intensities, The differences were relatively small in the evolution of some territories with respect to others..

In the cycle we find ourselves in, started in 2014, has developed in a different way. First of all, price growth has not been induced by the financing of mortgage loans, when these fall a 12% between 2014 y 2022, besides, evolution has been very divergent in different areas. While prices have risen in Madrid and Barcelona and their peripheries and in tourist areas, have remained fixed or have even decreased in those areas with less economic dynamism. On the other hand, and taking the whole of Spain as a reference, prices rose only 16% in nominal terms between 2014 y 2022, but in real terms they have decreased 3%. In fact, according to @MITMA, Some provinces present nominal prices today that are lower than those they had in 2014. Son: Córdoba, Jaen, Teruel, León, Palencia, Segovia, Soria, Zamora, Royal City, Cuenca, Cáceres and Ourense.

And although predicting is not always easy, If we try to identify the places where the priors will decrease as a result of the increases in interest rates and the economic situation, The models created from @UveValoraciones indicate two groups of provinces with some probability of prices falling in 2023. The first group, It is made up of those provinces in which prices have risen the most since 2014 and that coincide with greater economic dynamism. In these provinces, what are Madrid, Barcelona, Málaga, Balearics, Santa Cruz de Tenerife and Las Palmas, our real estate bubble detection model has pointed out some municipalities of more than 25.000 inhabitants in which real prices exceed the prices that the model calculates based on the main economic variables that are related to said prices. Differences between model prices and actual prices indicate that, to occur, the drop in prices in these areas would hardly exceed the 8% y, that for the declines to occur, first there should be a significant drop in transactions during, at least, 18 months. Therefore, for this group of provinces, the price drop, if it were to occur, would have no place in 2023 but in 2024 and it would be, in any case, moderate.

On the other side, The second group is made up of those provinces in which nominal prices are lower than those of 2014. These provinces show a trend towards a gradual decline in real estate prices sustained in the long term, but little related to GDP variations, interest rates and inflation. This decrease must, rather, to phenomena such as depopulation and the excessive percentage of empty homes. In these provinces the drop in prices is quite probable in 2023 but, to occur, would be very moderate with drops between 1% and the 3%, due to similarity with what happened since 2014.

So, What are the provinces in which a price drop is most likely in 2023? After this analysis it seems clear that they will be Soria, Zamora, Palencia and Ciudad Real. But it is important to note that these drops would be moderate if they occur, lower than 3%. In Madrid, Barcelona, Málaga, Balearic and Canary Islands price drops are more likely a little later, specifically in 2024 but, previously, we should see very significant drops in the number of transactions in these provinces during 2023. And if produced, These drops would also be moderate.