While there are positive signs, demand remains weak and home prices will likely continue to decline for at least another year, the advisory says. Moody’s expects to “see occasional improvements in the housing market, but believe such movements will be temporary and contrasted across regions.”
Moody’s acknowledges the improving economy and other positive indicators reported in recent months. But the analysts concluded the upswing will not be enough to overcome Spain’s continued oversupply of available homes, high unemployment and a dwindling population.
Domestic demand, in particular, will remain sluggish, as unemployment remains “extremely high.” An overall “sustainable” recovery is still at least a year away, Moody’s says.
Several analysts have expressed scepticism about recent reports showing an uptick in prices.
“Despite many proclaiming the end of price drops and some embarrassing newspaper headlines heralding soon-to-be seen increases, it’s still too early to speak of a generalized recovery,” Fernado Encinar, , co-founder of Idealista.com told Bloomberg.
Idealista’s data shows prices down five per cent recently.
“That figure differs from reported rises and this is due in part to the different methodologies used to compile the data,” Encinar said.
Moody’s did agree with analysts who note the variance in activity from region to region, which makes it difficult to draw accurate conclusions from the overall numbers. Several of the reports show vast differences between interest in coastal areas and cities popular with foreign investors, and areas where there is still a plentiful supply of poor product.
“As a case in point, the 0.8 per cent year-over-year house price increase that Spain just posted for the second quarter showed high price volatility across regions,” Moody’s notes