The research division of Spain’s second biggest banking group is upbeat about the prospects for the market this year.
BBVA Research forecast that house prices will rise 3% on average this year, sales will rise 10% to around 440,000 homes changing hands by year end, and planning approvals for the pipeline of new homes under construction up by 30%.
BBVA Research have huge resources and data at their disposal, and one of the biggest names in Spanish banking, so their quarterly “Spanish Real Estate Situation” reports are taken seriously in Spain, and get wide media coverage.
The fair outlook for the market as they see it comes from positive macro trends like rising employment and household income, which they explain “will have a positive role and continue stimulating demand for housing.” New mortgage lending rising at a good clip is also “playing a relevant role in the housing market recovery and will be key to its development in 2016.”
GLUT NO LONGER A PROBLEM ON THE COAST
The Spanish property bubble burst with a monumental glut of more than 600,000 new homes for sale with no buyers in sight, which dragged down the market for years. But the glut has shunk on the Mediterranean coast and in the big cities, and has “ceased to be a problem,” say BBVA Research. There are even some market segments where new homes “are already in short supply,” they say.
HOUSE PRICES RECOVER AT DIFFERENT SPEEDS
Spanish house prices have finally bottomed out and left minimum values in the past, they say, pointing out that average prices were already rising in all Spain’s autonomous regions by the end of 2015, for both new and resale homes.
In the strongest markets where the recovery started first, namely Madrid, Barcelona, and the Balearics, prices are already up by more than 10% compared to cycle lows reached two years ago.
Forecasting an average national increase of 3% this year, big cities and some coastal areas will see prices rise more than that. Conversely, there are still some areas where “prices have not yet joined the positive trend, and will remain stable in real terms.”
“The trend suggests that 2016 will see an increased number of markets with positive price movements,” they concluded, whilst also pointing out that risks exist despite all the positive data. The political uncertainty and doubts about growth in and out of Spain are making the housing market “more erratic,” they say.
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