The Spanish economy in 2012 is not likely to improve according to the latest forecast of the Bank of Spain. The official 2012 forecast by Banco de España (Bank of Spain) predicts that the Spanish economy will shrink by 1.5% during the year and the unemployment rate will increase to 23.4%. Furthermore, the International Monetary Fund predicts that Spain will still be in recession for two more years because the negative G.D.P. will be 1.7% in 2012 and 0.3% in 2013.
One of the main reasons why the economy will keep on moving towards recession is the tax pressure on public and private expenditure. In other words: people and institutions will consume less because the new Conservative government has increased taxation according to the current deficit climate.
How will the economic situation in 2012 affect the Property Industry?
Well, this is a difficult question with controversial answers. Firstly, we believe it will help to improve the rental market. Secondly, we maintain that any recession has a negative implication for the main economic sectors but, in terms of property prices, the new recession with its higher unemployment, higher tax pressures and less expenditure power, will mean lower property prices. The need for selling property is putting more and more pressure on Banks with a portfolio of repossessions, and individual sellers.
Negative feelings about 2012
The Spanish Brick has conducted an informal survey with Spanish and UK Estate Agents operating in Spain. It has been more of a spontaneous and informal phone-calling session to Agents than an official in-depth survey. Nevertheless, in general, Agents have forecast that 2012 will be a challenging year for keeping the business in the track. In the other hand, it will be a golden opportunity for assisting low-budget buyers responding to property prices trend.
In general, Estate Agents agree that easing fiscal pressure on new buyers will help to improve sales, but it is not a guaranteed phenomenon. The main problem for Agents is the lack of credit available to potential buyers, because Banks are not so able to give credit in this economic climate, even if they want to.
The latest figure in money lending from banks to Spanish homebuyers is from November 2011. In that month, Banks lend a 38.7% less money for property than in November 2011. In numbers, Banks lend from November 2011 to November 2011 a total of € 3,082.9 million for property transactions. It means one of the lowest of the recent years.
A good year for property buyers
Property sales still going down in the current crisis since 2011 is the year of the most dramatic figures in terms of prices drop and property transactions. Hopefully 2012 will be a breaking point and the trend will be an increase of transactions thanks to the lower prices.
That is the editorial voice of The Spanish Brick: “We think that 2012 is going to be a good year for property buyers. Bargains in terms of low prices, location and specifications will come out to the market for once. Banks have the pressure and the sub-prime is very difficult to sell to individual buyers. We will see good opportunities in 2012”
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