A new report from a prestigious economic foundation argues that it’s only a matter of time before the real estate sector starts to contribute to the Spanish economic revival.

Adaptation and translation of an article published by El Pais.

The Savings Banks Foundation (Funcas in Spanish) believes that “the role of construction will sooner or later be significant” in Spain’s economic recovery. Two researchers from this organisation respected for its economic analysis, Santiago Carbó and Francisco Rodríguez, point out that the sector “will continue to have undoubtable relevance” in maintaining economic growth in Spain.

The latest edition of the Economic Information White Papers published by Funcas includes an analysis by Carbó and Rodríguez on the role of real estate for the next few years. Both experts show that the property sector has made price adjustments because of the crisis, which have led to a drop in property prices of between 30 and 40 per cent since their peak in 2008. They glimpse a “budding recovery” based on the improvement of data for transactions and growth of mortgage contracts. For this reason, they expect property prices to start growing from “2015 onwards”, albeit moderately, since high levels of unemployment and debt will continue to affect demand.

Allowing for differences between regions, the number of salaries required to pay for a property was an average of 6.1 in Spain at the beginning of 2015 (from 4.1 salaries in Castilla la Mancha up to 8.8 in the Balearics). “Even if foreigners account for around 13 per cent of sales, most of the market still depends on the Spaniards’ economic circumstances,” Funcas emphasises.

On the side of supply there are also impediments for the property sector. Funcas points out that the stock of unsold homes still numbers between 1 and 1.4 million empty properties, of which around half a million are new builds.

Nevertheless, amongst all these indicators, Funcas sees signs that property is making a comeback as an economic driver. In support of this, it points out that figures for social security registration showed there were 96,909 new employees in February 2015, of which 26,068 were in construction, ahead of all other sectors.

Better Statistics

Within this context of property sector recovery, economists are demanding an improvement in the statistics available in Spain. “Despite the importance of construction, the quality standards for information on property price indicators are not comparable to those used in countries like the US,” they complain.

Carbó and Rodríguez feel that data from the Spanish Ministry of Development and the main valuation companies that provide them is missing purchases made in cash and by means other than mortgages, which are currently excluded. In addition, they point out that the statistics based on valuations show market trends with a slight time lag.

At the same time, they point out that statistics from the Spanish Statistical Institute (INE in Spanish) based on public property registries, do not reflect the real prices agreed between the parties involved in a purchase.

This situation, they claim, also occurs in statistics offered by property portal, which collect higher prices than the real ones since they look at the prices offered without taking into account later negotiation.

Spanish Property Insight adapts and translates selected articles from the local press for the benefit of non-Spanish speakers.

This translation is based on the following article (in Spanish): El ladrillo será relevante en la recuperación “tarde o temprano”