The Spanish property portal Fotocasa hosted a series of talks at the Fotocasa Real Estate Conference 2017 earlier this month in Madrid. Over 200 property and marketing professionals attended the event, which included market analysis by recognised experts, roundtable debates, and awards.
First to speak was Gonzalo Bernardos, director of the Masters degree in Property Consultancy, Management and Promotion at Barcelona University, who spoke on trends in the Spanish property market over the next year. He emphasised that “price expansion will reach all cities and everywhere in Spain will soon be experiencing price rises”. In particular, he highlighted “Barcelona, where the year will end with a 20% year-on-year increase, Mallorca with an over 20% increase, and Madrid with slightly less than 20% because of its huge capacity”. He added that “prices in large cities in Spain will continue to rise until 2021”.
The economist also believes that “unemployment will be around 10% in the next few years and on the table at the moment are salary rises that will bring more consumer confidence and higher purchasing power. This will gradually weaken the rental market.” He said that “it’s currently cheaper to buy than rent because interest rates are at historic lows and the Euribor is in negative territory”. However, he underlined that “Spain is currently a long way away from a property bubble”.
Turning to the question of Catalan separatism, Bernardos believes that “with independence, the Catalan economy would be a disaster: people and companies would leave, bank accounts frozen, a currency devaluation, etc.” Catalonia “would be the most affected, although Spain as a whole would be too. The market doesn’t look good if independence is declared,” was his conclusion. Since then, the Catalan president has declared independence and suspended it in the same sentence, confusing everyone. It is now highly likely that Madrid will suspend Catalonia’s autonomy and impose direct rule by the end of the week.
Five key questions
Beatriz Toribio, head of Research at Fotocasa, gave a talk on the current situation of the Spanish property market by asking the following questions: Is the recovery for real? Are we moving towards another property bubble? What’s happening to prices? Is the Spanish view of property changing? Who’s buying property?
Toribio said that the market recovery is for real. “We started to see the first positive signs in 2014, although it’s been up and down since then. And now we can see the market is recovering.” She added that “2017 is the year of recovery. Confidence is around because financing is available and the improvement in the economy and employment are improving things. We’re starting to see sales figures in line with those from 2011.”
Toribio agreed with Bernardos that there’s no risk at the moment of another property bubble. “There’s no risk because financing, although higher, is more controlled. 4 out of 10 mortgages are fixed rate and 40% of sales take place without a mortgage, which also protects the market.” She added the “levels of activity are below those during the boom years and prices, although they’re rising fast, are still well below their highest, 42% lower according to the Fotocasa Property Index.”
“Other factors holding back the bubble are low salaries, and the loss of purchasing power, which means most people still cannot afford to buy a property despite lower prices over the last few years,” she said.
She explained that “rentals have gained ground and the Spanish are changing their view of property, although Spain is still largely a country of property owners. We still attach great value to property as an asset and we view it as good investment,” she said. “Young people look on rentals more favourably, although they still plan to buy in the long term.”