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Weak Mortgage Lending Holding Back Recovery Say Pros

Property professionals participating in a recent round table debate at Barcelona Meeting Point Property Show,largely agreed that demand for Spanish property is starting to rise due to the return of mortgage lending, though not as strongly as hoped.

At the round table, organised by KPMG, were Agustín Vidal-Aragón, Managing Director of BBVA Real Estate, Juan José Brugera, President of Inmobiliaria Colonial property company, Damià Calvet, Manager of Incasol and Javier López Torres, Spanish partner of KPMG Real Estate.

Vidal-Aragón noted that “although the homeownership ratio has fallen since the start of the crisis in Spain, the recent economic rebound points to an upturn in the Spanish property market, similar to the US and UK, as we can see in the increased demand for residential property”.

He justified this conclusion pointing to an increase in employment, growth of family income, stability in prices and greater flexibility in mortgage lending to families, which experienced year-on-year increase of 40 per cent in the first eight months of this year (based on data from Spanish notaries).

For his part Brugera, the President of Colonial, said mortgage lending “has not returned with the intensity” everyone hoped for, meaning the recovery is being held back. He argued that Spanish banks need greater clarity on the regulatory framework, and what percentage of exterior financing they can rely on, before they start lending normally again.

According to Vidal-Aragón, the stockpile of unsold property in Spain is around 500,000 units, whilst new building activity has collapsed. His gloomy forecast was that the housebuilding industry will only meet demand in the medium term.

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