What are the factors behind recovery?
We touched on some of these factors in our Spanish Real Estate Forcast but here are a few more which could play a big part in this, some of which come from a report by the 'Sociedad de Tasación' (ST) a leading property valuation company.
One of the conclusions of the report is that there has been a steady increase in the ST confidence index which reached a low (30.6) at the end of 2012. From this figure it steadily rose to 44.6 to the end of 2014. This could in part be due to the fact that, as prices reached close to their nadir, those who were able, bought at these relatively low prices which, in turn (in some areas) drives factors such as scarcity which can impact on prices.
No ChangeThe report also points out that prices in the last quarter of 2013 and the first three quarters of 2014 varied less than 0.5%. So, although there was a dip of 2.5% in 2014 compared to the previous year, this is skewed by the high price at the beginning of 2013. Stability also breeds confidence (see above).
New Builds in SpainThe average price of newly built homes, although still on a downward trend, has fallen less in 2014 (2.2%9 than in 2013 (7.8%) and 2012 (6.9%), a considerable change and one which could conceivably turn into an upward trend.
Strong Pound Against the EuroThe recent rise and predicted growth of the pound against the Euro could see a return to previous levels of UK buyers, to supplement the increased numbers buyers from the rest of Europe. This could also see a fresh boost in April of this year when the UK pension changes come into effect.
Record Tourist FiguresLast year saw an all time record number of tourists flock to Spain and as one of the countries main industries this can only be good for the economy. Indeed up to the third quarter of 2014 domestic spending had risen by 2.6%. It is fairly safe to assume some of those tourists will go on to buy a property in Spain.
Less EffortThe ST report uses something called the Real Estate Effort Index to measure and compare housing prices. This index is defined the number of years an average citizen would take to buy an average priced property according to full salary received. So, for example a person with a salary of 100.000€ per year would need two years to buy a house at 200.000€. This index goes back to 2004 when it was 11.4 with a high of 13.7 in 2006 to its current value of 7.8. In short, houses are more affordable although the ideal level is thought to be around 4.
Spanish Banks are lending again. There is competition in the Spanish mortgage market this year with a hard to beat offer of Euribor + 1% from Kutxabank and other not far behind.