If Economy Fares Well, Housing Prices Will Hit the Bottom in 2014

19/02/2014 – Cinco Dias

Until when will we witness housing price drop-off in Spain? Economy is the breeding ground for the real estate sector and it will not sprout without it being fertile. The second decisive factor is credit availability – as the mortgage granting goes historic record low – and without revival in this field as well we cannot even dream of prices reaching the rock bottom level.

Deutsche Bank has recently released a report on situation on the real estate market in 11 countries in the Eurozone. It shows that the housing prices in Spain could rise as soon as during 2014. The bank warns that stable or low prices hamper the economy. However, affordable prices fuel it when there is at downturn. As the Bank of Spain informed, the GDP increased by 0.3% in 2013 and it is said that at the end of this year it will fix at 1%.

The weakest European economies are presently the Spanish, the Irish, the Greek and the Dutch. Among them, Ireland is the most extreme example of a housing price slump with decrease of 50% since the real estate bubble burst. Greece and Spain adjust their prices by 30% and the Netherlands cuts them by 20%.

Also other countries received a hit from the burst, although not so shattering. In Portugal the discounts reach 5%, in Italy and France 10%. In turn, Germany and Austria maintained upward tendency in prices during the recession.

Even though the prices in Europe has not completed the adjustment yet, Deutsche Bank points out that in such countries as Spain and the Netherlands the process might be in the final stage. Even in Ireland a tiny rebound has been observed.

 

Original article: Cinco Días (M. Calavia)

Translation: AURA REE

63