Photo credit: Kevin Poh
The credit rating agency forecast this week that house prices in Spain will continue to drop until 2015, marking further bad news for the Spanish property market, which is struggling to recover from a major slump. Spain’s construction boom left the country with a large inventory of unsold homes when recession struck, an excess that Standard & Poors predicts will hold the market “in the doldrums” for at least another year.
“The fall in house prices in Spain will continue even though the economy has escaped recession, thanks to strong exports,” the agency said.
Indeed, Spain’s economy officially grew for the first time in years in the third quarter of 2013, a positive sign after a long period of stagnation.
Growing but not growing
The news that prices will continue to fall may come as a blow to some, then, but new research by fotocasa.es highlights the popularity of Spain’s affordable homes. By comparing data from the Ministry of Public Works with house prices, the Spanish portal found that six regions enjoyed a turnaround in sales in the third quarter of 2013 compared to 2012. The Canary Islands, Catalonia, Murcia, Valencia, Andalusia and La Rioja all saw property sales climb or remain stable, with the former three seeing transactions rise by double digits.
The comparison reveals that these areas are where prices fell the most in the last 12 months, reports Kyero. Indeed, in Murcia, Catalonia and Valencia, house prices dropped by 11 per cent, while transactions rose 9.5 per cent, 12.1 per cent and 3 per cent respectively.
The demand has been noticed all over the industry. For overseas mortgage company Conti, Spain accounted for 43 per cent of enquiries in November, outperforming any other destination for third month in a row – the first time since 2008 that Spain has accounted for so many of the firm’s enquiries over so many months.
The country is still a long way from full recovery, though. Figures from the National Statistics Institute show that residential sales fell 8.6 per cent in September 2013 year-on-year. But on a monthly scale, transactions climbed 1.1 per cent, the first positive monthly rate for the month of September since 2009.
Indeed, from January to September this year, property sales remain positive, recording a 0.2 per cent growth compared to the same nine months of 2012. The first half of this year, moreover, saw the highest turnover of property transactions in 9 years with €2.834 billion brought into the country, compared to the lowest year in the last decade which registered just €199 million.
Valencia again led the way for sales, adds the National Statistics Institute.
Indeed, the Costa del Sol remains the most popular destination in Spain for holidaymakers and home buyers alike, as its combination of famous beaches and falling prices prove hard to resist. The President of the Tourist Board and the Council of Malaga announced this month that in the first half of 2013, foreigners bought a total of 3,260 homes in Malaga, an annual rise of one-third, according to the General Council of Notaries.
Marc Pritchard, Sales and Marketing Director for leading house builder Taylor Wimpey España comments: “Even though Spain is now officially out of recession, many Spaniards are still feeling the pinch of turbulent economic times; the situation seems to be easing across neighbouring European nations, which is having a positive effect on the Spanish property market.”
“Here at Taylor Wimpey España we are experiencing an influx of foreign buyers on the Costa del Sol in particular with a 257% increase in property purchases throughout October alone, in comparison with the same period in 2012, showing Spanish property in prime coastal locations remains a hot commodity!”
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