The positive trend of rising home sales seen in the first half of the year will continue in the second, but house prices will lag behind, says BBVA, Spain’s second biggest bank.
The “Real Estate Flash” report prepared by BBVA Research points out there were 188,432 homes sales in the first half of the year, an increase of 7.9% on the same period last year, according to data from the General Council of Notaries.
Rising sales were driven by expanding mortgage credit, low interest rates, rising employment, and greater confidence of Spanish consumers, explains the report. “Macroeconomic expectations for the second part of the year will keep the sector’s recovery going,” it says.
BBVA Research stress the fact that 17% of sales in the first half of the year involved a foreign buyer, a positive trend which they expect to continue. “The good performance of some of the principal economies demanding property in Spain, such as Germany and the UK, along with the depreciation of the euro, continue to be important assets for the Spanish real estate market.”
With interest rates near record lows, and expectations they will stay that way in the short to medium term, BBVA Research say that stable mortgage financing costs “will continue to work in favour of a recovery in the property sector.”
Excess housing stocks will continue to be absorbed by the market, they forecast, especially in areas where economic activity is concentrated. That will boost construction sector output significantly, “albeit from a relatively low base.”
In the short term they expect house prices to remain stable. However, “increasing demand in the context of falling supplies and relative financial stability will favour the gradual recovery of house prices,” they conclude.