Bankinter: Home Values to Rise by 4% in 2015

22/07/2014 – El Economista

According to a report by Bankinter, housing prices in Spain are going to stop dipping down in the second half of the year and they will generally rise by 4% in 2015 with significant rebounds in prime areas.

Beyond the increase stand foreign investors who are highly attracted by returns offered by the Spanish residential market.

Moreover, in spite of the fact that the housing stock waiting for sale amounts to 740.000 properties, Bankinter assures the supply is limited as there are less than 100.000 “undesirable” dwellings which will have to be traded at bargain prices. Given all that, the “sellable” houses will start to be absorbed still this year.

However, “neither developer activity, nor housing supply will advance considerably in 2014-2015”, the study points out. It also suggests that thanks to an improvement in second home sales, prices will creep up soon, hobbled by the end of the tax relief for buying a house and the financial effort rate for a property purchase which is still going through the roof with 33.8% of the annual household income.

Bankinter says that soon the market will see houses at prices slashed by 50%, marketed by Spain´s “bad bank”, Sareb.

The entity assures the Spanish real estate market is at the “turning point” towards recovery of the sector. It will be slow, though, due to persisting, skyrocket unemployment rate, shrinking population and no hope for return of lending in short term.

Furthermore, Bankinter claims the sudden jumps in sales registered from January to May (accumulated +25.6%) have been distorted by dramatically poor performance in the same months of 2013.

The bank predicts that purchases of homes will reach 330.000 transactions in 2014 and 365.000 deals in 2015.

Out of these, new houses are expected to represent 65.000 dwellings in 2014 and between 90.000 and 100.000 in 2015.

Therefore, Bankinter reckons the “property sector again is perceived as an interesting investment opportunity” but only if conducted through “careful asset selection with view to an over five year term”.


Original article: El Economista

Translation: AURA REE