18 February 2015 – El Mundo
Bankinter expects the volume of house sales to reach 450,000 by 2016.
The large ‘stock’ (in poor locations) will not prevent the recovery in construction.
GDP is forecast to grow by 2.2% in 2015, which will significantly boost the real estate market.
Demand for housing in Spain will increase again in 2015, with a 15% increase in the volume of transactions, which will drive up property prices by 1.5% on average and by a further 5% in 2016, according to the half-yearly report about the real estate market in Spain, prepared by Bankinter.
The financial institution states that, given the heterogeneity of the Spanish real estate market, prices in most provincial capitals and in the towns furthest from the large cities will remain stable and may even decrease slightly over the next few months. Meanwhile, in the most sought after areas (prime) of the main cities and in the best locations of tourist centres, prices will increase and may even grow by more than 3% in 2015 and by 5% in 2016.
Bankinter explained that this improvement in the outlook for the real estate sector is due to the economic recovery – GDP is forecast to grow by 2.2% this year – which will lead to a better climate for employment, increased confidence and greater access to finance. However, the financial institution warns that it does not expect the recovery of the sector to be fast or sufficiently profound to generate a return to the pre-crisis position, either in terms of transaction volumes or price increases.
The report states that unemployment will remain above 20% over the next two years; the financial effort required to make a purchase will continue to be high due to the decrease in disposable household wealth; the size of the Spanish population will decline (with the consequent negative knock-on effect on demand); and homes foreclosed by banks will continue to come onto the market with big discounts.
Recovery in new build sales
In terms of demand, the report expects an increase to 400,000 homes in 2015 and to 450,000 homes in 2016. A significant part of this growth will be driven by a recovery in the sale of new homes and by the maintenance of demand from foreigners. This increase will cause (new) house sales to break through the psychological barrier of 100,000 transactions in 2016.
In the case of supply, Bankinter points out that Spain still has a stock of between 650,000 and 700,000 empty homes, based on data published by the Ministry of Development and Sareb. Nevertheless, it considers that “this will not prevent the reactivation of the construction sector, given the mismatch between the location of the surplus (stock and demand)”.
In this sense, it warns that around 100,000 homes may never be sold unless huge discounts are applied to compensate for their challenging locations. Whereas, in the prime areas, there is a shortage of supply, according to the entity, which will be covered through renovations and new developments over the next few quarters.
Original story: El Mundo
Translation: Carmel Drake