Spanish house prices rose above the Eurozone average in the last quarter of 2014, according to the latest data from Eurostat, the EU’s stats office.
We know that Spanish house prices rose 1.8 per cent in 2014, according to the official house price index published by the National Institute of Statistics (INE). You can dispute that figure, but let’s assume it’s correct. How does it compare to other European countries?
As you can see from the table above, Spanish house prices are hardly leading the pack, but merely reaching positive territory and beating the Eurozone average is good news for Spain, given the monumental housing bust it has gone through over the last seven years.
Ireland – another EU country that suffered a massive property bubble that popped in a spectacular fashion – delivered the biggest increase in house prices last year, up 16.3 per cent. The UK also had double-digit growth, not long after its own boom and bust. What short memories we have.
Will Spain go the way of Ireland, with spectacular house price increases in the next few years? Let’s hope not, as rapidly increasing house prices only encourage people to see homes as a speculative asset, which never ends happily.
Anyway, given the weak economy and size of the Spanish housing glut, it’s unlikely that average national house prices will rise at a double-digit clip anytime soon.
But I can’t rule out double-digit increases in certain segments in the next 12 to 24 months. Prime Barcelona, Marbella, and Ibiza, for example, where demand is strong and supply is limited. An Irish style recovery in local markets is not out of the questions.