At the current rate of declines, Spanish house prices will reach equilibrium with incomes by 2016, argues Jesus Encinar, head of idealista.com, a property portal.

Spanish house prices have been falling for five consecutive years, but not fast enough to make them affordable given household incomes in Spain, which have also been falling. Housing affordability won’t be achieved until 2016, according to Encinar, participating in a conference organised by the business school ESADE.

Furthermore, a recovery in the housing market is far from guaranteed, argues Encinar. It will depend on “many factors, and there is nothing certain about it,” he said.

Prices will continue falling, but at different rates according to the type of property and area. Values will fall most in segments where there is an over-supply. The economic laws of supply and demand will impose on the market.

The big problem is mortgage lending, or the lack of it. Home sales will not increase because “there are no mortgages, nor expectations there will be,” he said. “Mortgage lending is becoming a business of little interest to banks, and whilst the public deficit remains high, I doubt we will see a mortgage market like years gone by.”

Encinar’s fears are echoed by the head of Spain’s banking system. In recent comments to the Spanish parliament, Luis María Linde, Governor of the Bank of Spain, said that lending will be restricted for some time, even though there are some signs of improvement. “The credit situation is bad, but data for the last few months shows declines getting smaller,” he said.

Encinar points to another problem weighing on the market, in his opinion, namely the slow pace of progress by the Sareb, Spain’s so-called bad bank, which was established on the insistence of Brussels, to clean up bank balance-sheets and liquidate excess housing inventories in return for a bank bailout.

Balance sheets have been cleaned up, but the Sareb has not moved quickly to sell homes at market prices, said Encinar. With a sales objective of 5 billion Euros per year “it had only achieved sales of 900 million,” at the halfway mark this year, said Encinar, who also doubts the Sareb is sufficiently capitalised now that market prices are below the level assumed in its business plan.