Uncertainty casts shadow on recovery as political stalemate continues

Spanish Parliament
Spanish Parliament

A strong end to 2015 has turned into doubts at the start of 2016 as Spain’s political stalemate continues, explains a recent article in the Spanish daily El Mundo.

After a recent piece explaining how the Spanish property market finally took off in 2015, El Mundo followed up with a downbeat article pointing out some of the doubts and uncertainties currently facing the Spanish property market.

“Looking at 2016, there is a sense of uncertainty starting to take hold, despite the incipient recovery noted in 2015,” says in-house property specialist Jorge Salido writing in El Mundo.

For the time being it is just a feeling, and there is no evidence that the recovery has ground to a halt, says Salido. The fundamentals still look positive, offering the “economic ingredients (low interest rates and greater mortgage lending) for the market to continue its recovery in 2016,” says Juan Antonio Gómez-Pintado, President of the Spanish Developer’s Association and owner of the real estate developer Via Celere, quoted in the article.

But as Salido points out, the Spanish property market contracted in January after 16 months of consecutive gains, perhaps calling into question the strength of the home sales recovery. That said, more timely figures from the Notaries showed the market rebounding strongly in January, so there is no conclusive evidence to suggest the market has started shrinking again.

Gómez-Pintado attributes some of the blame to the ongoing political stalemate following Spain’s inconclusive General Election in December. “It would be absurd to deny the impact of political uncertainty,” he says.

Developers are also worried that, once pent-up demand from the long crisis has run its course, sustainable demand from segments like first-home buyers might be too weak to take its place, especially if mortgage law reforms being discussed reduce access to credit.

The article concludes pointing out how important the real estate sector still is to the Spanish economy – “above 7% of GDP in 2016” says Gómez-Pintado. The sector needs a stable Government with sensible policies on mortgage lending and home building, but who knows if the politicians are listening.