Are property price declines finally stabilizing in Spain


HPI Spain

Data issued today by the Spanish Statistical office suggests house prices in Spain are stabilizing in 2014.

Whilst the 3rd quarter shows a very small decrease with the rate of growth in prices slowing against the previous 2 quarters never the less over the last two quarters the general index is more or less level.

New builds versus resales.

New housing is showing a small price increase of 0.8% annual rate when looking at quarter two to quarter 3 which is interesting because when looking at actual sales during the same period new housing sales had slowed against resales. This fact may suggest that whilst new housing prices have risen this rise has actually stunted the amount of sales made and may mean developers need to consider whether the price rises can be justified against the key competition for purchasers they have which is private sales.

Second hand house sale prices when assessed against the 2007 base year decreased by one tenth annually in the quarter.

When taking quarter 3 data against quarter 2 of 2014 new housing increased by 1.2% whilst resale’s stood at the same levels for both quarters.

The last 12 months

The overall stabilization of house prices is quite profound when looking at the figures from the beginning of 2013 to the 3rd quarter of 2014 and this stabilization can now be seen as a continuing trend. With general improvements in the overall economy in Spain, continuing small but significant falls in unemployment and a more buoyant international buyers market the signs are very positive for the property market in Spain with further improvements anticipated in 2015.

With prices down by over 40% from their height Spanish property now appears to be good value for money when considering the price per meter square for houses in major Cities and coastal areas.

Regional housing price differences

By region there now appears to be a direct correlation between what is happening in number of buyers buying in the area and house prices.

Madrid who had the highest transfer of property rights in September has the highest increase on the HPI when considering the 3rd quarter of 2014 against the 2nd quarter. Other regions where sales themselves have been buoyant including the Balearics, Barcelona and Valencia also showed small price increases.

Andalucía and the Canaries both showed very small decreases and those areas still registering decreases are in general the areas least attractive to overseas buyers.

The future

It is difficult to see the price of property in Spain increasing at rapid pace. Whilst overall economic indicators remain in the right direction general concerns about the Eurozone still exist and both for nationals and international buyers. Concerns about committing to the high ticket and the often luxury option of owning property in Spain will dampen growth.

Overseas buyers will probably continue to lead the way in helping both sales increase and prices continue to stabilize as those wishing to buy a holiday or investment home in Spain move decisions forward to ensure they buy at the best possible prices seen in many years. With in general prices being now at 2002 to 2003 levels what can be bought, and the value for money it provides in Spain, is in comparison to many other countries where house prices have continued to rise over the last few years,considerable,

There does remain an oversupply of housing stock in Spain which will keep a lid on price increases ensuring that we do not see the unrealistic and unsustainable price rises experienced in the first 10 years of the 21st century.

A continuing rise in access to competitive credit and Spanish Mortgages will assist the general market as will low base rates.

All the indicators are that 2015 should like 2014 be a good year to consider a purchase in Spain as it is likely that during 2015 and into 2016 prices will steadily start to increase as demand strengthens and oversupply diminishes.

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