Consultants, real estate agents and economists say that inflation is driving increased demand for homes as a safe place to protect money’s value. Despite the risks involved, it is expected that there will be more investment in the real estate sector in the near future.

The purchase of real estate continues to be a valid alternative, either to rent or to remodel and sell. However, it is crucial to avoid risks and carry out a detailed analysis before buying. The reasons that make housing profitable are examined, the factors to consider and it is evaluated if there will be growth in real estate investment in the near future. Real estate investment is a way to protect savings through a real asset.


Things to keep in mind when investing in real estate

Economists and real estate professionals recognize housing investment as positive, but stress that liability is determined by various factors. In general, they emphasize the importance of avoiding excessive debt, considering the long term, and analyzing the market for a well-located and in-demand property.

Although investing in housing can be a safe haven, they warn that not all options are viable. It is crucial to analyze the asset and its prospects before making the purchase. They also highlight the importance of choosing and studying a market with solid and diversified demand for the property that you want to acquire, in case you want to rent the home. In addition to negotiating the rent review clauses in the contract well, taking inflation into account.

Another thing to keep in mind is to avoid over-indebtedness, do not buy on credit and do not expect short-term speculative returns. It is recommended to have an initial savings contribution of 25% to 35% of the value of the property to avoid financial tensions in the face of changes in interest rates or inflation, such as the current ones.

Finally, it is advisable to consider the maintenance of both the home and the building, as well as the orientation, views and height of the property. In addition, the increasingly sought-after services, such as the garage in the same building, swimming pool and leisure and garden areas, must also be taken into account. These factors can impact both quality of life and the long-term value of the investment.


Possible risks

Experts emphasize the importance of investing prudently, taking into account risks such as possible increases in interest rates and regulations in the rental market. They also warn about the danger of acquiring an overpriced home and the impact of declining renters’ purchasing power.

Small home investors face the risk of possible increases in interest rates, especially if they need to finance a large part of the purchase through a mortgage. The European Central Bank (ECB) is expected to increase the cost of money, which would result in higher interest expenses on loans. To mitigate this risk, it is recommended to opt for fixed-rate mortgages, which allow you to maintain stable monthly payments despite fluctuations in interest rates and the Euribor. However, it is noted that this alternative could become more expensive over time, so it is advisable to make calculations when seeking financing to properly evaluate the available options and select the most convenient in each situation.

On the other hand, it is advisable to analyze the rental regulations before investing and consider Madrid as an attractive option due to the shortage of housing, high demand and the guarantee that measures that restrict rents will not be implemented according to the regional government.

Due to inflation and the forecast of an increase in the price of homes, it is more profitable to buy a home as soon as possible. However, the importance of analyzing the market well or seeking the advice of a real estate agent, since unjustified overvaluations are being observed in some properties due to this effect. It is advisable to consider pessimistic scenarios when making investments. Since during the previous real estate bubble people had more optimistic and subjective analyses, forgetting the period of falling prices in the 90s. This caused negative effects for those who bought homes at high prices due to the higher price expected for low-cost homes. new construction, delivery delays and the impact of the rise in the CPI of tenants.

The real estate market is preparing for a wave of investments

Despite the uncertainty in the current outlook, experts forecast an increase in investment in housing in the coming months. A study carried out by the Alfa Inmobiliaria network reveals that approximately 10% of the homes brokered by the chain are intended for investment, with the majority of buyers focused on buying to rent. The JLL consultancy also anticipates that rental housing will be the most outstanding asset in real estate investment in Spain during the first quarter of the year. In addition, according to the president of the Forum of Real Estate Economists, housing investment will not be negatively affected by inflation and is expected to continue growing at moderate rates in the future.

According to the professor of the Master in Real Estate at the University of Navarra, investment in housing has gained strength in recent months and this trend is expected to continue throughout the year due to demand accumulated during the financial crisis. RTV Grupo Inmobiliario also points out that unsatisfied demand and high levels of inflation will attract investors to the residential market, increasing the number of transactions. Furthermore, once the current tensions are resolved, there will be a rebound in investment, with possible increases even higher than those observed so far.

If you are interested in taking advantage of real estate investment opportunities and obtaining solid returns, do not hesitate to contact us. Our team will be happy to provide you with personalized advice and help you make informed decisions.

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