Key metrics: Property market forecasts for 2014

A year ago housing market forecasts for 2013 were generally pessimistic, but this year the mood is more positive, with some commentators forecasting the bottom of the market in 2014.

Signs of optimism aside, there will be plenty of bad news to come in 2014, as you can see from these five forecasts for key metrics in the Spanish housing market during 2014.=

Lower house prices

Spanish house prices will continue falling through to 2015 forecasts the ratings agency Standard & Poors, down 5pc in 2014, and 1pc in 2015, largely thanks to the oversupply putting vendors in a weak position.

Fotocasa, a property portal, forecast asking prices down by another 8pc to 9pc this year, and rental prices down 5pc.

Lower mortgage base rates

With Eurozone base rates now at a record low of 0.25pc, experts forecast that Euribor will follow suit and plumb new depths in the coming months.

Ending last year on 0.543pc, some forecast Euribor will go as low as 0.25pc, though the consensus is more like 0.30pc.

Bigger bad debts

The percentage of personal mortgages in default recently surged to 5.4pc according to data from the Bank of Spain, and experts forecast it will rise above 6pc this year, as families finally run out of savings, and banks fess up to non-performing loans.

According to one support group, 150,000 families have lost their homes since the start of the crisis, 65pc of them due to unemployment. The number of families evicted with debts could rise to half a million by the end of 2015.

Mortgage lending bottoms out

Though mortgage lending is still plunging, Luis María Linde, Governor of the Bank of Spain, sees signs of “a certain amount of optimism” and reasons to believe the bottom is close. Banks like Santander, Bankia, and Sabadell all say they expect to lend more in 2014, though any recovery in lending will be gradual at best.

Home sales start to rise

Sales volumes will increase by a modest amount in 2014 forecasts José García Montalvo, a professor and real estate expert at the Pompeu Fabra University. “There will not be many more homes sold, but there will be some more sold, because we have reached the bottom,” he says, quoted in the financial press.

“In coastal provinces there will be an increase in sales, because foreigners will carry on buying more, but I don’t think there will be an increase at a national level, at best it will stabilise,” forecasts real estate consultant José Luis Ruiz Bartolomé.

SPI Member Comments

Thoughts on “Key metrics: Property market forecasts for 2014

  • Como siempre “Hope springs eternal in the breast of the believer!” When oh when will Spanish commentators tell the real truth instead of looking always for false dawns. We are in a very deep mire so its no use ignoring the fact. It is time to be realistic and bite the bullet. Lets accept that the property market will probably continue to fall and stop celebrating by using terms such as “bottoming out” and “less rate of decline”. Ireland bit the bullet and is now coming out of a declining market isn’t it about time we stopped wishful thinking and actively dealt with the situation.
    1. Demolish speculative property that will never find a buyer.
    2. More difficult! Change the attitude that the foreign buyer is there to be milked, ignored or badly treated.
    3 Even more difficult. Start to give him the respect he deserves and accept that he is a great asset to Spain in producing wealth and employment.

    Juan Miguel

    • Robert Gray says:

      “2. More difficult! Change the attitude that the foreign buyer is there to be milked, ignored or badly treated.” I will be leaving Spain because of this, I have already advised everyone in the UK and elsewhere that I know not to buy houses in Spain and I will move to a less corrupt country.

  • Lasse Eriksson says:

    Well, Juan, in many way’s you are right,
    it’s not time to sit back, hope for the outside cash flowing in still refusing to adopt to the situation !

    Having friend and/or contacts from different parts of the world, many, despite liking a lot about spain, despite values to a large degree being quite good now, people still hold out in large numbers because they do not really trust Spain as such.

    Changing rules, taxes going up and down, the somewhat “relaxed attitude” in regards to services and workmanship,
    that don’t make it easier.

    Truth is; many places in Spain allready today offer fantastic value in terms of houses, location and living, and it is still not enough to convince people. That say’s something.

  • Lasse is perfectly correct. I too have been watching property prices decline or, to put it another way, what you can get for your money getting bigger & better month by month. So far, so good But l have also seen the way the Spanish politicos have reacted to the problems. So far, so bad.

    My feeling is one of extreme caution. I cannot trust Spanish politicians, in Madrid or in the provinces, to make policy that is helpful, logical, fair and sensible. What they seem to me and many other observers to have been doing these past 5-6 years is unhelpful, unfair, illogical and stupid. A good example of all these faults combined is the raising of tax on property purchase in Valencia. The list of statements and policies by bankers and politicians that are one or more of these negatives grows longer every week. The Spanish people have lost trust in them and so have l.

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