Average Spanish house prices will rise by 1.4% this year, 0.8% next year, and then start falling again in 2016 to the end of 2018, claims a new study by Kelisto.es, a price comparison website.
Kelisto analysed supply and demand, economic growth, interest rates, employment, incomes, and the rate at which the market is digesting the glut of new homes to arrive at their conclusions.
House prices have fallen from a peak average of €245,313 in 2007, to €157,717 today, a cummulative fall of 37%. By region, the falls have been biggest in Catalonia, Navarre, and Aragon.
Despite the wrenching fall in house prices, and abundant weaknesses still plaguing the Spanish economy, Kelisto forecast that property prices will finish this 1.4% higher than last year, the first annual rise since 2008. The latest house price index from the property registrars showing an increase of 1.15% over 12 months to the end of Q3 support this forecast.
“The rebound in prices and sales could be attributed to the improvement in the outlook for the economy, which returned to growth in the second quarter,” explain Kelisto. “But this contradicts the data on mortgage lending, which continues to fall. Between January and August this year there were 134,082 new mortgages signed for residential purchases. Furthermore, households are no better off,” says Estefanía González, spokesperson on personal finance for Kelisto.
House prices may rise a fraction this year, but Kelisto forecast they will stagnate in 2015, rising just 0.8% to finish the year on €158,979 for the average Spanish property. If prices rise at all next year it will be mainly thanks to foreign demand, and local bargain hunters.
Between 2016 and 2018 Kelisto forecast moderate price falls as the market digests the new housing glut. Prices will then dribble down for three years before bottoming out and returning to growth in 2019 / 2020. “Even so, the rebound will be small, and a long way from the double-digit increases registered before the crisis,” says González.