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Real Estate Recovery Is For Real Says Report


A new report from the Spanish estate agency chain Forcadell, in collaboration with the University of Barcelona, argues than the Spanish property market recovery is real and here to stay.

Adaptation and translation of an article published by El Mundo.

The estate agency chain Forcadell, in collaboration with the University of Barcelona, have presented their Report on the Property Market 2015 – Current and Future Trends, overseen by Gonzalo Bernardos, Economics lecturer and director of the Master’s degree in Property Consultancy, Management and Development, at the University of Barcelona.

Among the main observations in the report on the Spanish property market today and tomorrow are an increase in private consumption and company investment in 2015, a forecast 5 per cent increase in property prices across Spain this year, and a 10 per cent decrease in the number of rental transactions in 2014 compared to 2013.


This year the report’s authors expect the increase in liquidity and greater solvency of banks, coupled with the improvement in Spain’s economic situation, to enable banks to lend more to consumers and companies at lower rates of interest.

Mortgages for homebuyers are expected to be the leading loan product. The report forecasts another battle for market share between lenders in the second half of the year, rather like the run up to the last boom.

The better economic situation is expected to have considerable repercussions on the Spanish residential property market. Rental demand is expected to grow as many households will remain shut out of the mortgage market.

Regards home sales, the low budgets of many buyers, and the lumpy distribution of the stock of homes for sale will lead to an uneven development of property prices in different neighbourhoods, in the same city as well as in different localities within the same province or region.

On the other hand, the purchase of public debt by the European Central Bank (ECB) will also mean high levels of liquidity in the system, which will give mortgage approvals a big boost, as well as business and personal loans.


Looking at the current situation, and the future perspectives for the property market in Spain from a statistical point of view, the recent property crisis has led to a sharp reduction in the number of transactions, a decrease in the number of home starts, and a considerable drop in house prices.

According to data from the Ministry of Development, between 2007 and 2014, the number of property purchases went down by 56 per cent, from 836,781 units to 365,594. With regards to housing starts, the decrease has been close to 93 per cent. And turning to house to prices, these fell by 30 per cent between Q1 2008 and Q4 2014.

In 2014, the housing affordability ratio (the financial effort required by an average household to pay their monthly mortgage costs) was 35 per cent. The economic crisis has generated a big increase in inequality of wealth distribution in Spain, with many more low-income families, but also a significant increase in the so-called middle-to-upper and upper classes. For households whose monthly income is below €2,500, property purchase is not an option, while those who have substantial capital accumulated, or a monthly income of €4,000, Spanish property is currently a cheap asset to buy.

In the second half of 2014, the first signs of change in the property cycle became noticeable. The two most visible were the increase in transactions, and stabilisation of property prices: The number of sales rose from 300,568 to 365,594, and prices fell by a mere 0.3 per cent. A detailed analysis of the causes behind this confirms that the Spanish residential property market was still in recession in 2014. A large proportion of growth in sales had its origin in the high number of properties bought by funds and investment companies from banks.

Despite the high level of unemployment, and low salaries that a large part of the population will continue to make do with during 2015, the recovery of the residential housing market is here to stay. This recovery will be noticeable in the number of sales, which will go up by approximately 20 per cent this year compared to last year.

Demand for property will increase considerably this year due to growth in mortgage loans, the substantial increase in Spanish investors, the move of some from renting to buying, all helped along by a macroeconomic recovery. Across Spain, property prices will go up by around 5 per cent, the key to this rise will be the big increase in demand detected in large provincial capitals. With regards to home starts, developers will start building approximately 65,000 properties, a figure that signifies a growth of over 60 per cent compared to 2014.


Barcelona's Casa de les Punxes
Barcelona’s Casa de les Punxes
Resale property prices are rising in Barcelona, reveals the report, though new-build (never previously sold) house prices were still falling in 2014, down 5.4 per cent. Home sales in Barcelona are increasing, driven by mortgage lending, more jobs in the city, and foreign investment in Barcelona’s real estate.

The Barcelona property forecast for 2015 is for rising sales and prices, and practically no discount between asking prices and sales prices, as vendors were already standing their ground in 2014, with discounts of less than 10 per cent.

Mortgage financing has shot up from just 30 per cent of sales in 2014, to more than 80 per cent of sales at the start of 2015.

Last year the average buyer was over 40 years old, while in the first few months of 2015 the average age dropped to between 30 and 35 years old. 80 per cent of buyers are Spaniards, and resident in Barcelona, mainly business professionals, executives, and middle class.

Unemployment and instability resulting from the economic crisis, and a change in traditional ways of thinking, have made renting a more attractive option in large cities like Barcelona. The 2015 forecast is for the number of transactions to stabilise, and for rents to register a slight increase in Barcelona.


Wrapping up, the report claims that practically all Spanish banks are currently solvent, and will have no liquidity problems. To increase their profits banks will have two main options: buy up other banks, or increasing lending significantly.

The report says we don’t need to worry about another property bubble for three reasons: Lower house prices, stricter risk control by banks, and better regulating by the ECB. Furthermore, bank regulations adopted by the ECB will prevent all banks from having an excessive volume of credit associated with property activity.

The least risky investment at the moment is the purchase of plots in upper-middle class areas in large cities, though that strategy probably won’t deliver the best returns. Another good strategy in this market is the purchase of properties in a ruinous state in the best locations in large cities.

Regarding business premises, offices, and industrial warehouses, the latter is currently the best buy. There are many warehouses located near Barcelona and Madrid property that can be bought for less than the value of the land they are built on, claims the report.

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): ‘La recuperación del mercado residencial será una realidad’

SPI Member Comments

Thoughts on “Real Estate Recovery Is For Real Says Report

  • Good luck with those predictions. According to an article in the Times this week there are still 3.4 million empty properties in Spain. They are still in LA LA land.

  • Chris Nation says:

    Lies, damned lies and statistics …

    I’d say that any report coming from estate agents declaring “recovery is for real” is like the P.R. dept of The Turkey Defence League declaring an upswing in people turning vegetarian the week before Thanksgiving & Christmas.

    There are other sources of this info which are not so partial. I’d rather believe those.

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