The residential property market in Spain is set to bottom out next year and see a 2% rise in prices in 2016, according to ratings agency Standard & Poor’s.
It is well documented that the fall in prices has been slowing in recent months and the agency is predicting that prices will fall overall by 2% this year compared with 4.6% in 2013.
Property prices in Spain have fallen around 30% since the economic downturn hit the country’s real estate markets in 2008.
S&P says that the positive outlook for the property market is down to a faster than expected recovery of the Spanish economy and a subsequent quicker fall in unemployment.
According to the Spanish Central Bank the country’s economy grew by 0.5% in the second quarter of 2014, the fastest rate in six years, and the latest job figures show that 192,000 people had joined the country’s workforce in the 12 months to the end of June.
Experts say there has been a change in trends in the Spanish property market in the last 12 months with the arrival of British and US property funds who are taking advantage of the offers in the Spanish property market.
But the market is unlikely to recover everywhere at the same pace. It is predicted that properties on the coast, including areas popular with second home owners, will see prices rise first.
However, according to S&P the long term recovery of the property market could be kept on a leash by the high number of properties on the market in Spain and the country’s population decline could also put a brake on the long awaited recovery.
S&P said in January that Spain’s housing market was overvalued by somewhere in the region of 12% to 20%.
According to Mark Stucklin of Spanish Property Insight, Standard & Poor’s is a bit more pessimistic than other agencies, who believe a recovery may begin as early as 2015.
Several reports in recent weeks have spotlighted the slowdown in the price declines, prompting different analysts to predict the bottom of the market may be nearer.
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With the pound above 1.20 against the euro, this is a good time to buy in Spain. ‘Now you have prices in coastal areas that are not difficult to find with a 50 per cent or more decline. With the best property, I think we are now in price stability and, with the euro getting cheaper compared to the pound, that will mean that it gets more interesting for British buyers.’The key, of course, is the ‘best’ property which should not be confused necessarily with the ‘cheapest’ property.
According to Adam Cornwell at Feltrim International, some banks in Spain are now offering 100 per cent or more mortgages. ‘Whilst Spanish mortgage lending is not expected to recover in 2012 due to high unemployment and limited bank funding, financial institutions have to optimise their balance sheets. To incentivise quality buyers they are prepared to offload these homes at rock bottom prices and with the highest mortgages. If a bank is prepared to lend all of the money, more than 100 per cent on a project that has fallen to 50 per cent of its value five years previously then it must have the confidence that the market has reached the bottom and that the properties will regain value in the not too distant future.’
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