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Ratings agencies cautious about potential for rising house prices

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Spanish house prices are rising fast say official figures, but still falling according to other sources.

Two of the biggest international rating agencies – Moody’s and Fitch – say the Spanish property recovery will continue, but prices won’t rise as fast in future as they have done in the recent past.

Spanish house prices rose in the second quarter by an annualised 5% – if you believe the figures from the Property Register, and by 4% – if you believe the National Institute of Statistics.

“Despite this signs of recovery, we believe that house prices will not continue growing at such high rates, and will stabilise instead,” says a recent report from Moody’s.

For their part, Fitch forecast the recovery will be “slow and uneven” even though the latest data appears to show the market has bottomed out. They forecast price increases in single digits next year.

High unemployment still above 22%, a glut of at least half a million new homes, low wages (below the EU average), and negative demographics with a shrinking population of younger people, are all weighing down on the market, and constraining the room for growth in both transactions and prices.


Another opinion comes from the European Central Bank (ECB), who have offered reassuring words about the Spanish property market. Years of crisis have dealt with some of the imbalances, which explains why prices are now growing in “countries like Ireland and Spain, in a better macroeconomic context and favourable financial conditions.

House prices in eurozone as a whole are now on the road to recovery, say the ECB. “Recent developments in house prices in the eurozone suggest that the crisis is over and the recovery underway.”

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