A sizeable majority of Spaniards now believe that house prices have finally bottomed out, reveals a new survey of consumer opinions by the property portal Fotocasa.es.

That represents a big change from the last time Fotocasa carried out this survey in 2013, when the majority believed that house prices would continue to fall, and they were right. Market expectations can be self fulfilling.

Any recovery in house prices will be based partly on expectations. When people believe that house prices are going to rise they buy if they can and want to. On the other hand, when potential buyers expect prices to fall, they normally wait and see. That’s what John Maynard Keynes meant when he talked of “animal spirits”.

“After falling 45% during the crisis, the idea that house prices won’t fall any further is gaining ground,” explains Beatriz Toribio, head of research at Fotocasa. The asking price index published by Fotocasa (see chart above) supports the idea that house prices have bottomed out.

23.5% of Spanish households currently live in rented accommodation, up from 15% in 2011, but 70% would still prefer to be owner-occupiers, so it seems the Spanish have not abandoned their love-affair with property, even if mortgage credit restrictions mean that fewer have the opportunity to own their own home. 63% of young adults who live in rented accommodation see it as a temporary situation, and hope to buy their own home in future. The worst real estate bust in Spanish history doesn’t seemed to have dented much the national appetite for investing in property.