La Caixa is the latest bank to forecast improving fortunes for the Spanish property market in 2014.
La Caixa, the third biggest bank in Spain, forecasts that unemployment will start falling in the second half of this year, helping to bring the adjustment in house prices to an end.
They take the view that a gradual economic recovery is more likely than not in 2014, saying “the risk of a new slump appears limited.” But a sustained recovery will be difficult without a comeback in the real estate sector, which has powered many of Spain’s recent booms, and which is still deep in the doldrums.
Though stable house prices are likely to be the result of an economic recovery, average house prices are expected to continue falling for the immediate future, although some housing market segments could buck the trend.
Economic recovery & mortgage lending
Economic improvement will transmit to house price stability through better prospects for mortgage lending. A gradual economic recovery taking shape in the second half of 2014 will “little by little, facilitate a change of trend in lending, with a decreasing rate of contraction in the course of 2014.”
The idea that mortgage lending will start to flow again is shared by other experts cited in the Spanish press. Gonzalo Bernardos, a professor at the University of Barcelona, and regular commentator on the Spanish property market, forecasts that banks will start to lend again in the second half of the year.
Frank Beasley says:
I believe if long-term Interest-only mortgages were more available to the young Spanish couples, and Buy-to-let mortgages available for investors, I am sure this would spark a revival in the Spanish property market, which in turn, would hopefully help revive the general economy in SpaIn.
I can promise you – the vast majority of English people want Spain (not the football team – but the country) to do well, as we love visiting your country.