15 January 2015 – Expansión
The ratings agency Fitch believes that the downward trend in house prices in Spain is coming to an end after seven years, but that unemployment and the real estate “stock” mean that there will not be a rapid recovery in prices.
Fitch explains that the stabilisation of house prices and of the mortgage market is a reflection of the macroeconomic recovery in Spain and the growing willingness of banks to lend to the most creditworthy customers.
However, despite the efforts made by the European Central Bank (ECB) and the “cheap money” that has been made available to Spanish banks, Fitch does not expect there to be a rapid recovery in the number of mortgages loaned, Efe reported.
According to the ratings agency, the depreciation in the value of foreclosed and sold homes has amounted to 70% in certain cases with respect to their initial valuations.
Similarly, the price range in which banks are selling foreclosed homes has also declined considerably, says Fitch.
Fitch’s analysis suggests that the discounts on forced sales are higher in the coastal regions, such as Andalucía and Cataluña, and that further price cuts are required to find buyers for foreclosed properties and those linked to mortgages signed before the financial crisis.
Nevertheless, although mortgage lending is returning, the high level of unemployment and the housing surplus mean that we should not expect to see a rapid rise in prices.
Furthermore, Fitch points out that 768,000 homes built between 2002 and 2011 remain empty, and that the real estate sector has now bottomed out in terms of prices, as indicated by data published by the National Institute of Statistics (INE), which indicate price increases of 0.8% in the second quarter of the year, the first increase since the outbreak of the crisis.
Original story: Expansión
Translation: Carmel Drake