J.L.M. Campuzano (Spanish Banking Association) | The Bank of Spain published an interesting summary on Tuesday of the housing market’s current situation. This report will form part of the central bank’s next quarterly bulletin. Here we’re going to highlight its main conclusions:
In a nutshell:
- Investment in housing has grown on average at anual rates of 1.5% over the period 2014-2017, higher than the 1.0% registered by construction as a whole.
This investment has benefited from the improvement in the labour market, as well as very favourable financing conditions.
- Housing prices have grown 16% since end-2014
This is after a decline of 37% in nominal terms (45% in real terms) since their peak at end-2007.
- There has been an continued upward trend in property sales since 2014.
That said, the figures compared with the crisis in relative terms are still very moderate.
- Sales in 2016 were 50% of those recorded on average between 2004 and 2007.
Housing sales are centred on the second-hand segment, while the new homes segment continues to decline.
- Sales carried out by foreigners are up 17%
Mortgage financing is very favourable, with a clear upward trend.
- But the balance is still dropping slightly, with declines at the moment in households’ accumulated debt.
- The levels of demand/supply of housing is very diverse according to the different geographic regions.
- The stock of homes on sale is dropping slowly.
In the medium to long-term, the trend in the housing market is determined by demographic factors, amongst others.
In conclusion, the financing available is favourable and responsable. Demand is dynamic, although that is relative compared with the sharp drop during the crisis. But there is still an adjustment on the supply side pending.