International property consultancy CBRE remains upbeat about the Spanish housing market this year.
A recent report from CBRE forecasts that home sales will rise by 20% this year, and new house prices by 5% as a new market-cycle gets under way.
A few weeks ago they published the results of a survey of leading international property investors ranking Spain third in Europe by investment priority.
CBRE describe the outlook as “encouraging”, with sales up around 25% between 2014 and 2015, and forecast to rise 20% this year.
CBRE also forecast that housing starts (planning approvals) will rise to between 60,000 and 65,000 this year, up from 45,000 last year. That is still a long way from the 150,000 to 175,000 that would be a “normal” level for a country like Spain.
The inventory of new homes on the market at the end of 2015 was 400,000, and this could fall to between 300,000 and 325,000 at the end of this year, they say.
Furthermore, housing affordability is now where it should be, say CBRE. The ratio of house prices to household income is now “reasonable from a historical perspective.” With new mortgage lending accelerating, unemployment falling, and the new homes glut waning, the outlook in 2016 is positive.
Last year the recovery was led by Madrid, Barcelona, and the Costa del Sol, and this year it will extend to cities including Valencia, Malaga, Bilbao, and other areas where there are signs emerging of unsatisfied demand.
RATIONAL AND SUSTAINABLE
With a property market recovery underway media coverage often asks if Spain has learnt from past mistakes, or if it is doomed to repeat a drama of boom and bust. According to Heriberto Teruel, CBRE director of corporate finance for Spain, this time around it will be different. A stable population, a declining appetite for home ownership, investment risk aversion, and tighter lending criteria mean this cycle will be “rational and sustainable” says Teruel, quoted in the Spanish press.
BUT PRESSURE BUILDS IN PRIME LAND MARKETS
House prices are one thing, but the market for land in prime areas is already showing signs of tension as demand runs ahead of supply. Transactions and prices are both rising, substantially in some areas, report CBRE. A lack of building land with licences in place, and problems getting planning permission and financing to develop land lies behind this growing tension.