Spanish property market shows signs of recovery due to overseas investment
The real estate market in Spain is continuing to improve and become more stable thanks to an increase in property sales over five consecutive month’s year on year, according to Spanish property experts Pure Property Overseas.
There is real evidence that the Spanish property market is on the road to recovery and sales in July had increased by 10% annually and by 9% quarterly. The increase in transactions signal a rise in confidence in the market, with the rise in prices is purely down to demand outstripping supply. This is good news for Spain after it had really been hit by the economic crisis, which saw house prices drop consecutively over 8 years. However, Spain is not quite in the clear yet, but it is heading in the right direction.
The increase in sales has been spurred on by the fact that foreign buyers are now showing an interest in the property market there. This shows that there is room for increases when the demand from locals increases as unemployment and mortgage lending improves. It looks as though resale’s are becoming more popular as new sales have taken a hit and have dropped by 8.3% in a year and this pattern is likely to continue.
The home building industry has pretty much disappeared but it is still a relatively good time to purchase a property off-plan if a development can be found. The new homes that are currently on the market do not have the appeal that a brand new home would have and this is down to the fact that they are indeed several years old. Whilst they have never been lived in, when the crash hit Spain they failed to sell and have therefore been sitting there becoming tired looking and dropping in value.
Where sales are concerned, inner parts of Spain have seen some promising increases with Caceres seeing an increase of 87% and areas in the Costa del Sol have also seen their sales figures rise above the national average. The national house price for Spanish properties is likely to stay relatively stable as supply outnumbers demand and this is likely to stay for some time.
Figures also show that the average rental price in Spain fell by 0.7% over the last 12 months and this is a trend that has continued since April of last year. All but two of Spain’s 17 regions saw a decrease in rental costs whilst Catalonia and Asturias saw a slight increase.
Rental prices are now seeing a downward movement which is different to the increases that are being seen with house prices - the first real increase since the first quarter of 2008. This proves that those who are renting are likely to see a decrease in yields. This deters people from turning to property as an investment, but there are still some positives to take as rental yields have increased in comparison to 2007, whilst the price of houses has dropped by 33%.
This shows the affect that the economic crisis has had on the rental market and the fact that there are now too many rental properties in Spain, however, agents are now stating that rental properties in main areas are now running low.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.