The Bank of Spain’s latest Financial Stability Report suggests that the Spanish property market has largely completed its readjustment after boom and bust. And based on some data, the Bank can even report signs of “timid growth” in house prices during this year.
According to Spain’s monetary authority, house prices reached their highest in 2007 with readjustment starting just afterwards. Since then, the Bank claims property prices in Spain have fallen between 30 and 40 per cent.
But the Bank also points out that price correction took place in two phases: 2008-9 and 2011-13, coinciding with the Spanish economy’s double recession.
In this respect, the Bank explains that the price drop was not quite so pronounced in 2010 (partly due to fiscal reasons), and that so far in 2014 prices are trending towards stability, and even experiencing some timid growth.
The Bank points out that future market tendencies will continue to be influenced by the Spain’s economic performance.
Regarding the unsold stockpile of homes, the Bank quotes Ministry of Development estimates of over unsold 560,000 units at the end of 2013, a year when just 3 per cent of were sold. Since its height in 2009, the stockpile has been reduced by 13 per cent.
All in all, demand for housing is showing signs of recovery, driven by foreigners, although this demand is considerably below levels seen in the boom years.