It is no secret that 2014 and 2015 were a turning point for the Spanish real estate market after a long period of crisis. In these two years the market began to get back on its feet after biting the dust in 2007 and 2008.
The building stock has been declining in many zones, although others persist and quite possibly may have difficult to sell. Most important, the housing crisis has been a debugging in the industry, finishing with the least professional firms and opening a window of opportunity for the surviving companies.
What is expected for 2016 in the housing market?
I am glad you asked me that question. Probably we enter the year of recovery in many areas and stabilizing in others. Economic expectations and housing prices have bottomed and even out and in very specific areas, it has begun to rebound.
Moreover, according to recent data from the National Statistics Institute (INE), the price of housing rose 4.5% in the third quarter of 2015 compared to the same period of 2014. It is the largest increase since the last quarter of 2007 and chains up with six consecutive quarters going upward.
In this line, many gurus from the property market considered to be the time to buy a house, which again become an attractive option after the sharp adjustment of prices and interest rates at historic lows.
The revival of property development in Spain.
Another important aspect is the revival of property development. You will probably have started to see cranes around our “Costa” and some small property developments are already sold from plan in a few months. In addition, new promoters with their own funds are offering higher value added product (more sustainable buildings, personalized and with added services) although these developments are offered only on concrete areas where there are high demand, and lack of other products to compete.
Transactions are gathering momentum. In 2013 some 300,000 homes were sold in Spain, less than half that in the 2007, and this year the figure has already come close to 400,000 units.
400,000 units sold in 2015.
Overall I think that price adjustment is done and over with. As regards the stock there are areas below the equilibrium level, which may result in minor price increases in some localities around the Mediterranean area and in big cities like Madrid and Barcelona. Funding is responsive with the recovery of credit to businesses and some households. Even some financial institutions are publicizing that they are ready to start to finance purchases.
GDP growth in Spain is another important factor. Official figures show growth of around 3%. A very important fact because, according to experts of Studies at Caixa Bank, a point of GDP growth represents 170,000 more jobs.
The situation seems ripe for a takeoff in the housing market, although there are other negative issues on the other side of the balance. Unemployment is still very high, about 22% and the population at risk of poverty is also very high. Conditions which need improving, because otherwise there will be only a demand based on the foreign market, which is not enough to pull up the market from where it stands at the moment.
All in all, 2015 is closed with the consolidation of a new cycle for the housing market, a fact that has been certified by many institutions. The ending of a crisis that began with ferocity in the third quarter of 2007 and reached its peak in the year 2013.
Bankinter Bank in its semiannual housing market has had to revise down their forecasts. "We believe the current recovery cycle will not generate a new boom in demand for housing, but it is creating the right conditions for purchases to increase in 2016 to 420.000, units which it means slightly revise down our estimates published in February in which we estimated demand for 450,000 houses in 2016”. Having said that most professional of this industry are extremely happy if the figure of 420.000, units are really sold this year.