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Historical Data Reveals that House Prices Will Fall in 12 Months

The cost of purchase time and very late registrations in the case of the sale of new homes; asking prices versus actual sales prices in the case of second-hand homes, and, in particular, unemployment, distort the calculations. The fall in appraisal prices is already giving clues.

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On the basis that the crisis has originated from a phenomenon, the Covid-19 coronavirus pandemic, that is unprecedented in the history of the world, no one has a crystal ball to be able to clearly predict the date and extent of the price decreases in the real estate sector. But we do know that in the real estate market, sales crises and price decreases, as a result of an economic crisis, tend to manifest themselves clearly between nine and twelve months after the event. And unemployment is always the biggest trigger.

In this way, and according to the historical series studied by the real estate big data platform Brains RE, during the previous financial crisis, although the peak in the volume of residential transactions in Spain occurred in 2006 when almost a million homes were sold, the maximum value in terms of the average transaction price was not recorded until the first quarter of 2008, when it reached 2,017 euros per square metre. “This shows that fewer transactions were already being recorded before prices started to drop”, highlights Antonio Ramudo, Data Scientist at Brainsre.

Read the full article in Spanish.

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