The agency Standard and Poor’s (S&P) estimates that the price of housing in Spain will rise by 2% in 2016. The firm highlights that the collapse of the house prices in the country could reach its lowest point next year in light of the improvement of the economic conditions and the growing interest of foreign investors in the Spanish real estate sector.
Although the risk agency adds that the high indebtedness of households; the high stock of non-sold flats and the reduction of the population will continue weighing on the recovery of the real estate market in the next decade. “In the long-term, the high number of non-sold flats will dampen the perspectives of a sustained recovery of housing prices”, S&P states in its last report.
On the other hand, it highlights that the value of housing continues to be lowered slowly in Spain. Thus it reminds us that the prices of houses located in coastal zones and with a higher purchasing power (such as the Balearics, the Basque country or Madrid) are registering rises in the inter-annual rate.
There are some upturns that, in its opinion, are caused by operations carried out by foreigners. “We think that international investors will help the prices of the real estate sector reach its lowest point”, it affirms. A factor to which SAREB (Company for the Management of Assets proceeding from Restructuring of the Banking System) has also contributed. “The bad bank has to group its assets in portfolios to sell to investors, which has generated the idea that the prices may have hit rock bottom”, it adjudicates.
Improvement of the economy
“Spain has regained its competitiveness as a consequence of the adjustments in the labour costs and of the application of structural reforms”, the American company highlights. “This should stimulate the growth of Spanish exports more quickly this year”. S&P recently improved its growth forecast for Spain by forecasting that the national economy will increase by 1.3% in 2014 as opposed to the initial estimation of 0.8%.
At the same time it warns that the difficulties persist and with this it points out the poor behaviour of the internal demand (consumption). It stresses that the deleveraging of households is only just about reducing whilst family income continues to lower. However, S&P feels optimistic given that the net creation of employment and the relaxing of the fiscal policy are helping the growth of household income.