Predictions on property prices decrease
S&P Global Ratings state in their report Government Job Support Will Stem European Housing Market Price Falls that there will be a decrease in the real estate process on almost all main markets in Western Europe this year due to economic effects of the COVID-19 pandemic, and of course in the Spanish property market. The credit rating agency expects prices to decline by some 3% and 3,5% in Spain and suspects they won’t grow until 2022.
S&P has conducted an analysis of the residential real estate market in Europe and the consequences of the COVID-19 crisis. The results cast optimistic predictions for the sellers, as the company foresees a minimal decrease in real estate prices.
“We expect real estate prices to decrease by between 3% and 3,5% in Ireland, Italy, Spain, and the United Kingdom, by 2,5% in Portugal and by between 1,2% and 1.4% in Belgium, France and Germany”, states Boris Glass, senior economist form S&P Global Ratings.” Only in Switzerland, we predict that the process will continue to rise minimally by 0,5% this year, adds Glass.
Nevertheless, according to different sources consulted, Valencia property prices will fall around 10%.
Why Spanish property market will recover faster than the last crisis
S&P predicts that markets will bounce back quicker than expected. In fact, the credit rating agency foresees that the real estate prices will start rising again at the end of 2022. The job support plans implemented by the governments across Europe will contain the rise of unemployment rates and therefore, the drop of real estate prices, explains Glass.
Quick action taken by the Central Bank has limited the deterioration of credit conditions. Moreover, the monetary policy should continue to be extremely flexible and supportive, even as economies recover, the report notes.
“Households are currently accumulating large savings, which should help underpin the recovery in the economy and the housing market once virus containment measures are lifted and economies gradually begin to return to an appearance of normality,” says Glass.
We will see how future coronavirus outbreak will affect the market
According to the report, the forecast could be revised in the coming months if there is a new coronavirus outbreak in autumn or if the labor market does not respond to the measures imposed by European governments to prevent layoffs.
On the other hand, this could also mean that Spanish property investment will be in the investors target for a longer period of time.