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Fitch: House Price Recovery Will Be Slow & Uneven

15 September 2015 – El Economista

According to the ratings agency Fitch Ratings, the latest data shows that the decrease in house prices in Spain “has now bottomed out”, however, it expects the rise to be “slow and uneven”. Moody’s thinks that the banks will be the main beneficiaries of the expected rise in house prices.

The agency notes that house prices increased by 4% during the second quarter of the year with respect to the same period in 2014 – the largest increase since 2007, according to figures released last week by the National Institute of Statistics (INE).

In this regard, it highlights that house prices have increased in inter-annual terms for the last five consecutive quarters, and as such are in line with its latest forecasts, which predicted that prices would stabilise between 2014 and 2015, after seven years of decreases.

Fitch notes that the recent decrease in mortgage costs suggests that a surge in household loans will pave the way for a gradual recovery in house prices.

However, it warns about the impact that the number of foreclosed homes is having on the market, since they are affected by the weakness in the Spanish residential market, including a stock of between 500,000 and 600,000 empty new homes, the high level of unemployment and the limitations on demand due to low salaries.

For this reason, it believes that the recovery in house prices at the national level will be “limited” this year, with “significant” variations between regions and with a section of the market still experiencing “difficulties”.

Original story: El Economista

Translation: Carmel Drake