The Euribor inter-bank lending rate is on the rise and this has a direct effect on variable rate mortgage payments and on the rates offered to new buyers by Spanish banks.
With inflation on the rise across the world it looks like interest rates are going to spike.
In response to the Euribor rise I have seen several premature and irresponsible articles by estate agents telling sellers to sell now before real estate prices “inevitably” fall due to rising interest rates.
I would caution against rushing into selling a property at any time and especially in response to pushy predictions by estate agents.
While it is true that property prices are sensitive to rising interest rates, they are only one factor amongst many that govern buyer decisions.
Euribor rates are still low by historical standards as you can see from this chart…
While the Las Palmas and wider Gran Canaria property market are affected by macro-economic factors they are also influenced by local affairs.
For example…
- Tourism in the Canary Islands has bounced back after Covid and this boosts the local economy.
- In Las Palmas the new-build sector is booming but there is still a shortage of property, especially in the desirable areas of the city close to Las Canteras beach and the Triana / Vegueta old town.
- Las Palmas remains an safe and pleasant place to live, work or holiday despite instability in parts of Europe.
Property performs well in times of inflation
Another important factor to bear in mind is that property has historically been a quality store of long term value that can generate a rental return.
During other periods of high inflation, property has held its value better than most other assets and especially cash.
If you sell, do it well
I’m not saying don’t sell your Las Palmas property if you want to. Or arguing that property prices in Gran Canaria will go on rising no matter what happens.
All I can say is that if you do decide to sell, do it through a quality estate agent who has your best interests at heart. Whatever happens to the local and global economy, this is the best way to guarantee you get the best possible price.