The evolution of the Spanish housing market, whether prices go some few tenths of a percentage up or down, is closely watched by national and international analysts searching for signals that anticipate a trend of change. Most forecasts suggest that home prices in Spain still need to fall between 15% to 20% to be adequately adjusted.
According to José Ramón Díez, director at Bankia’s Economic Research, “the last figures published about real state market point out that the correction process already can be considered to be in a very advanced stage, although new home stock reduction is still very small.”
Díez refers to sales transactions, which took a breath in April by increasing by 10.8% to 23,642 compared to the same month of last year. This rise is due to operations involving new homes as well as second ones. “However, the most positive figure is that home buying by foreign people grew by 17% in 2012 reaching 2008’s levels. For instance, 45% of houses in the province of Alicante (in Spain’s eastern coast) were bought by foreigners in the first months of the year,” explains Bankia’s expert.
On the other hand, Díez also admits that “the most worrying matter is the accessibility to housing market, that is, the income percentage assigned to mortgage payment, which again is at 33% after tax relieves have been cancelled and the 12-month Euribor touched a record low.” Therefore, in order to put accessibility at the 25-30% range, the point from where the housing market recovery has started some other times, additional price depreciation by 10-15% will be needed, slightly under general estimations, of course “all other things being equal,” the analyst says.
Finally, it is surprising the significant gap regarding home price drops in the first quarter of 2013 between the Development Minister’s figures (-0,8%) and the National Institute of statistics’ ones (-6,5%), and so, between land registrars and property valuers. “ The logical thing is that the adjustment stands at a midpoint implying corrections by 2.5- 3% in quarter terms,” Díez concludes.