BBVA, Spain’s second biggest bank, argues 2014 was the year the Spanish housing market bottomed out, and 2015 is the year the recovery gets underway, giving seven reasons for optimism:
1. Increasing home sales: property purchases increased in November by 25,200 transactions, 15.3 per cent more than a year ago, and even more recent data shows the housing market grew by four per cent in 2014 (excluding social housing).
2.Falling unemployment: according to the national employment survey (EPA in Spanish), employment grew by more than expected. Specifically, in the last quarter of 2014 the working population grew 1 per cent, not counting seasonal effects, compared with the previous quarter while unemployment fell again for the seventh consecutive quarter. Therefore at the end of 2014 the Spanish economy had 425,000 more jobs than at the end of 2013.
3. Growing consumer confidence: December had a higher proportion of consumers who thought the economic situation would improve over the next 12 months.
4. Increasing household income: data from the third quarter of 2014 show, for the second quarter running, a growth in household income.
5. Falling mortgage spreads: another drop in interest rates continues to boost the recovery of demand fundamentals. In November, the mortgage interest rate associated with new purchases was 2.72 per cent, 0.15 points lower than the previous month, and almost a point lower than at the start of 2012. Coupled with falling house prices, that means improving housing affordability.
6. Improving confidence in the housing sector: during December 2014 the residential construction climate index recovered the ground lost in the previous month and, in year-on-year terms, the index closed the year with a rise of 17.2 per cent compared with the close of 2013.
7. More building activity: the latest data for new-build licences show that housing starts were adjusted in November which will not stop the total of building licences for 2014 exceeding the previous year’s.