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Santander: Spanish Home Sales To Stagnate In 2015


Spain’s biggest bank, Santander, does not expect the Spanish property market to expand in 2015, largely due to constraints in mortgage lending.

In a research note to investors Santander says levels of new mortgage approvals lie at the root of its doubts about the prospect for the property market in 2015.

Without an increase in mortgage lending it’s hard to see how the wider Spanish property market can stage any recovery. Ordinary Spaniards have not accumulated enough savings to lift the market as cash buyers.

As Spain’s biggest bank and lender, Santander is in a good position to make informed forecasts about Spanish mortgage lending in 2015.

That said, recent figures on Spanish mortgage lending from the Notaries suggests that mortgage lending in Spain is starting to recover, as the following chart illustrates.

notaries spanish mortgages november 2014

But as far as Santander is concerned, If there is any growth in credit, it will flow to “small and medium sized companies, not estate agencies.”

In an extra note of gloom, Santander forecast that Spanish economic output will not recover its 2008 level until 2018. That would mean Spain’s economy spends a whole decade smaller than it was at the top of the boom, with obvious implications for the wealth and purchasing power of ordinary Spaniards.

It should be noted that properties on the Spanish coast benefit from diversified, foreign demand. Coastal markets are less dependent on Spanish buyers than, say, provincial towns in the interior of the peninsula. Nevertheless, weak local demand would also be a negative factor in coastal areas.

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