After the worst housing crisis in the history of Spain, it appears that signs of a recovery are beginning to show.
Home sales in the country have jumped a massive 48 per cent to more than 81,000 in the first quarter of 2014, according to data compiled by the Ministry of Public Works and Housing. Mortgage approvals have also risen in March for the first time in nearly five years, as the property market begins to stabilise for the first time since 2008, when it was the catalyst for the most severe recession the country had seen in over 60 years.
Spanish banks’ lending criteria remain tight, with loans only being awarded to the most reputable and creditworthy house hunters, according to Jesus Encinar, founder of online real estate firm Idealista.com. A survey of first quarter lending conditions, published last month by the Bank of Spain, showed that banks did not vary their criteria for granting mortgages even as they relaxed their criteria for consumer lending for the first time since 2010.
Banks are however, taking the first steps to build up their home-loans business again, Encinar told businessweek.com.
“We have started to get calls from banks about advertising mortgage lending on Idealista”, he said. “When the crisis started, banks had their books full of mortgages. Now those holdings have diminished a lot, so they need to lend.”
Whilst Spain’s jobless rate is at 25 per cent, Spain’s National Institute of Statistics confirmed that growth accelerated to 0.4 per cent in the first quarter of the year, twice as fast as the Eurozone average. Imports are surging, which indicates that Spaniards are spending again after tightening their purses amid the toughest austerity measures in over three decades.
Many property experts believe that one of the reasons for the noted increase in lending and house purchases, is the belief of international and domestic buyers that house prices, which are at their lowest point in decades, are not likely to fall any lower. In fact, at the end of Q1 2014, despite a national year-on-year price drop of 5.41 per cent, house prices in some areas of Spain, such as the Balearics and Marbella, had begun to rise once more.
It’s not just house prices that have hit their lowest level though, Daragh Quinn, a banking analyst at Nomura International in Madrid, thinks that the number of property sales are not going to fall any more either, according to businessweek.com.
“We have hit the bottom in terms of volumes of new business,” he said. “It’s stopped declining and has started to increase again, but it’s coming off a very low base.”
Ron Wilkinson of Alta Vista Property says that he expects Spain to witness an increase in average property price before the end of 2015.
“Optimistically, I would hope to see an increase in average property price by the end of this year, however, there are a number of variables that could prevent this from happening,” he said.
“I would however, expect that by the end of next year, we will see a significant rise from the average prices we see today, due to the increased demand we have been witnessing in some areas.
“Whilst there have been continued national falls, the amount of areas with a growing average price is continuing to increase, and this points towards a national rise by the end of next year.”
Bradley Shore is an experiened travel and investment blogger, he likes to knowledge his readers on different investment oppurtunities around the world and at the same time help influence his readers into a good investment.