The demand for housing in Spain will pick up again in 2015, with an increase in transactions of 15%, which will raise real estate prices by an average of 1.5%, and by up to 5% more in 2016, according to the bi-annual report on the real estate market in Spain prepared by Bankinter.
The financial institution states that, given the diversity of the Spanish property market, prices in the majority of the provincial capitals and in the towns away from the large cities will remain stable or could even fall slightly in the coming months, while in the prime zones of the big cities and the most popular tourist areas, prices could register increases in excess of 3% in 2015 and 5% in 2016.
Bankinter explains that this improved forecast for the real estate sector is due to the country’s economic recovery – GDP growth of 2.2% estimated for this year – which they feel will lead to a better work environment, an increase in confidence and greater access to funding. However, they warn that they do not foresee the recovery of the sector being either fast enough or significant enough to bring it back to a situation similar to what it was before the crisis, with regard to both transactions and the price increases.
The report also considers that unemployment will remain above 20% in the next two years, the financial effort required to purchase a home will remain high due to the fall in available household wealth, the Spanish population will decrease, consequently slowing demand, and that bank-acquired housing will continue to be marketed at greatly discounted prices.
El Mundo reported that, with regard to demand, Bankinter expects that this will increase to 400,000 homes in 2015 and up to 450,000 in 2016. A significant part of this growth in demand will be driven by a recovery in sales of new housing and continuing foreign demand.
Bankinter stressed, with respect to the supply, that there is still a stock of between 650,000 and 700,000 empty homes – adding together data from the Ministry of Public Works and the Sareb – however they believe that “this will not be an impediment to the recovery of the construction sector, due to the uneven distribution of the surplus”.
In this regard, the bank warns that, unless demolition discounts are applied due to their difficult location, some 100,000 houses may never sell, while in some prime locations there is a shortage of supply, which they say will be covered in the coming quarters through refurbishments and new developments.