Bank of Spain says market fundamentals show stabilisation of property sector
The Bank of Spain believes that market fundamentals are now clearly showing that there has been a significant moderation in the adjustment that the Spanish property sector is currently undergoing. The update that they released for July and August says that investment in residential property is now stabilising with a minor decrease of just 0.8% in the second quarter of 2014 on the year’s first quarter.
The Bank of Spain also highlighted the fact that sales are now stable with sales to foreigners performing especially well. The report also mentioned the importance of the fact that the fall in mortgages granted has now began to show signs of having ended. The latest data released on mortgage credit by Spain’s National Statistics Institute shows that the decrease in the number of mortgages granted in May 2014 was down just 3.4% year on year.
There has also been improvement in the number of new properties being developed as planning approvals have risen over the last few months. The market is absorbing the excess stock but at a very slow rate, something which the Governor of the Bank of Spain, Luis Linde, says presents the biggest problem currently facing the sector.
He also said that the most recent statistics released by the Ministry of Public Works show that prices are beginning to bottom out. The data showed that there was a 3.4% fall in prices for March 2014 year on year while prices fell just 0.5% between the last quarter of 2013 and the first of 2014.
The generally positive comments from the institution are coupled with recent news that Spanish property is now one of the cheapest in Europe. The average three bedroomed, 90m2 apartment in Spain now costs ?131,310 which is 45% cheaper than its equivalent in Italy (?190,710) and 54% cheaper than the same property in France (?202,500).
As one would expect, the currently booming housing market in the UK means that buying the equivalent property there would cost a huge 147% more than in Spain. The average cost according to official data released by a UK government office is £260,000 (?324,190).
The study on how Spanish property prices compare to other European nations was carried out by Casaktua. They mention in their report how prices have stopped falling in various areas of Spain and are rising in a few places and that now is undoubtedly a very good time to invest in Spanish property as, in their opinion, the bottom has been reached.