IEE: Housing Prices to Stabilize in 2014 & Jump Abruptly in 2016

28/05/2014 – El Economista & El Confidencial

General director of the Institute for Economic Studies (or IEE by its Spanish acronym), José Luis Feito claims that on condition that the recovery reaches sustainability and the economic growth and employment “synchronise”, housing prices will shoot suddenly up within few years.

Furthermore, over the upcoming 10 – 15 years the values are expected to slightly exceed the Cosumer Price Index (CPI), but stay at below 2%.

CEOE´s think thank has projected this scenario in a report on “The Importance of Real Estate Sector For the Spanish Economy” during yesterday´s Real Estate Conference Madrid 2014, included in the professional programme of Madrid International Real Estate Exhibition (SIMA). 

According to Feito, in the short-term and before the strong rebound takes place, the property prices achieved their equilibrium with having faced the nominal value loss of 30% – 40% during the recession. “Forecasted further adjustment of 15% seems utterly unbelievable, the prices will stabilize in 2014 and the increase will not be visible before 2016”, he explains.

When it comes to the supply, Feito portends “abrupt correction for this and the next year”, however that will require the economy to continue on its way to recovery. Rise in the GDP and creation of more work places will also be imprescindible to see the improvement. Neither the population is going to rise significantly or witness massive migration, nor unlimited, cheap lending on levels from the bubble inflation will return.

 

Original article: El Economista (after Europa Press), El Confidencial (by Elena Sanz)

Translation: AURA REE

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