This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
Mark StücklinA big rise in house prices and rents in many EU countries since 2010 is starting to give ECB officials cause for concern, but prices in Spain have barely budged, at least according to Eurostat data.
An alarming rise in housing costs in certain markets “may force banking regulators to put curbs on lending and cool a market that has been growing rapidly despite a pandemic-induced recession,” reports Reuters.
Speaking at a financial conference last Thursday, Luis de Guindos, the Spanish Vice President of the ECB, said “The situation of overvaluations in certain residential markets is becoming more and more pervasive, and this is a source of concern for us.”
What might that mean? “We have to start to take into consideration the possibility of implementing again macroprudential measures in the banking space,” explained de Guindos in the characteristic argot of central bankers. In other words, tighten up mortgage lending.
House prices in the EU have risen by almost 40% since 2010, and rents by almost 15%, as you can see in the following chart.
But if you break the situation down by country it’s clear that housing costs are not a problem in Spain, at least according to data published by Eurostat, the EU’s statistics office, upon which the ECB base their analysis, one assumes.
As you can see from the chart below, whilst house prices and rents have more than doubled in countries like Estonia, in Spain rents have only risen a fraction, whilst house prices are still below where they were back in 2010, assuming Eurostat’s figures provide us with a good picture of the market.
As Spain is a part of the Eurozone, if the ECB takes measures to cool the EU housing market, the impact will also be felt in countries like Spain, Cyprus, Italy and Greece, where there is no sign of a housing bubble. Tighter mortgage lending to suit Germany, not to mention Estonia, will also reduce demand for property for sale in Spain.
Eurostat has also just published the EU inflation rate in December, which was 5% for the Euro area as a whole, and 6.6% in Spain. At some point the ECB might also have to act to bring down the consumer price index, not just housing prices. But in the meantime, high inflation is an argument for investing in property.
Adam Neale says:
Interesting read. Its always difficult to talk about Spain in general since there are such vast differences between regions. I think price inflation is very evident in places like Madrid, Barcelona and where i am based on the Costa del Sol, mainly fueled by supply problems set against increasing demand.