20 July 2017 – Eje Prime
The residential sector is going full steam ahead. House sales are expected to exceed 500,000 in 2017, an increase of 10% with respect to 2016, and house prices are forecast to rise by three percentage points with respect to last quarter, according to the figures published by BBVA Research in the magazine Real Estate Situation in Spain. In economic terms, the investment in housing will represent 9.4% of the growth in GDP in 2017.
Between January and May, 212,073 homes were sold, up by 14.5% YoY. The cumulative figure over the 12 months to May 2017 saw the number of house sales rise to 488,000 homes. The study reveals that, in a scenario in which there continues to be a limited supply of finished new homes, prices will rise by around 3% per annum on average, closing the year at €1,570/m2, similar to the values last seen in 2004, based on statistics from the Ministry of Development.
In this sense, the report states that property developers will continue to respond to the increase in demand and it is expected that they will request permits to build around 80,000 new homes this year, up by 20% to satisfy demand.
The market is growing across all of its component segments, primarily due to the sale of primary residences, ahead of demand from foreigners, which accounts for 17% of the total market, and second homes (9%).
Meanwhile, financing costs, with mortgage rates at around 2.2%, the expectation of attractive capital gains and strong demand from foreigners are all having a positive effect on demand.
Original story: Eje Prime
Translation: Carmel Drake