Spain’s property market just restored to pre-crisis levels
Spanish real-estate market, although strongly affected by the market crash of 2009, has restored it‘s transaction levels last seen before the economic crisis, even though property prices still linger at comparably lower point, official data showed Monday.
Strongly affected by a steep economic hike, almost 465,000 property sales or purchases were registered in 2017, “the highest annual figure since 2008”, a statement by Spanish national property registrar showed. That indicates a rise of almost 15 percent when comparing it to 2016.
Spain experienced a real estate boom at the end of the 1990s accompanied by spectacular price rises. After 2008, this bubble bursted as the global economic crisis curbed the Spanish economy, preventing many mortgagors from repaying their property credits.
Prices crashed and only started climbing back again in 2014 when the recession in Spain has come to an end. In 2017, property prices surged by an average of 7.6 percent in Spain compared to the year before. Despite that, they are still whole 21 percent below the levels of 2007.
Firm economic growth — 3.1 percent in 2017 — has boosted the recuperation of the real estate market. “Low interest rates in combination with a declining (although still relatively high) unemployment rate, which reduced to 17 percent in 2017 down from an apogee of 27 percent in 2013, are increasing affordability of housing,” as reported by ratings agency‘s Moody’s statement.
“In addition, although it is feasible that housing sales will go over 500,000 properties during 2018 for the first time in 10 years, there is still a huge gap between that and nearly one million of annual housing sales prior to 2007,” it states. “Construction activities currently are at 40 percent of the pre-crisis levels of 2007, partially balancing out the oversupply that took place before the crisis.”
As reported by Spanish national registrar, around 13 percent of real estate purchases were made by foreign citizens in 2017, the partition being led by British and French nationals. In some principally tourist-attracting zones, this proportion is even higher. For example in the Balearic Islands this statistic reaches 35 percent, or in case of the Canary Islands – 29 percent.
A real estate agency, which operates mostly in the luxury housing market, has declared a 92 percent rise in the number of sales contracts and a 311 percent increase in total value of purchases in the Spanish capital during 2017.
As stated by the property-focused business school El Instituto de Práctica Empresarial (EPE), the tendency ls anticipated to continue in 2018, with prices forecasted to rise by another 11 percent.