Some of Spain’s biggest banks are both forecasting that the Spanish property crash will draw to a close this year.
Earlier on in March BBVA published a research report forecasting more home sales this year “accompanied by a moderate growth in prices, and another rise in development activity,” citing improved expectations for economic growth, and improving financing conditions.
Now it’s the turn of Santander Research Department to publish an upbeat report on the Spanish housing market. Tomás Riestra, an analyst at the bank led by Ana Botín, believes that consolidation is possible this year thanks to increasing credit, and price growth.
Riestra points out that 60 per cent of Spanish provinces (32 out of 50) already have house prices that are on the increase, or at least have bottomed out.
Riestra forecasts that interest rates “will continue at historic lows” and “we can expect residential demand to continue gradually to rise, which will lend itself to an improvement in prices”.
Despite improving fortunes after years of trauma, Santander warns that the Spanish property sector will never be as important to the economy as it was before the crisis.
As a result, Riestra argues that property prices “will not reach pre-crisis levels” partly because of the glut of property, and partly because the industry has learnt from its mistakes, amongst other factors.
As Santander point out, this expected consolidation will take place after a house price collapse of 38 per cent between 2008 and 2014, and an economic contraction that shaved 10 percentage points off Spain’s GDP over the same period.
BBVA and Santander have a vested interest in the Spanish property crash coming to an end, as falling house prices and rising bad debts hit their balance sheets.