Spain’s housing market at cruise speed

The fact that Spanish housing market has seen a relevant increase of 59.6% in selling and buying operations in January, according to Spain’s General Council of Notaries, is not a coincidence. Figures of 2013’s same month touched a record low due to finalisation of fiscal exemptions for these transactions. In fact, numbers from the Spanish Statistical office, which usually show a two month gap, prove a -23,2% descent, so that its rates will be normalising in next months and first clear data free of tax deductions’ effects will come in March.

Nevertheless, there are some factors pointing to a trend shift within Spain’s real state sector. The most remarkable would be firstly January’s selling of houses rate, which has been the highest in last eleven months; secondly, prices of January’s transactions increasing by +8.9% to 1,294€ per square metre, which break past months trend downwards as well as suggest stabilization’s symptoms in housing market.

Drops expectations on Spanish real state’s assets have maintained investment in the sector below zero. Trend is changing, however. The fall by an average of 30% in housing market’s prices have led gross profitability of Spain’s renting sector to climb from +3.3% in 2008 to levels slightly over 4% in 2013, according to Bank of Spain.

“These profitable figures, in the current context of prices’s stabilization, mean an attractive investment opportunity for some savers, especially if we consider lower returns of other options such banking deposits, whose yield contracted from 3.1% at the end of 2011 to present 1.8%. However, demand of new houses will not regain 400,000 units that were sold in 2006 and 2007,” analysts at Bankinter in Madrid say.

So, Spain’s real state industry stands at a turning point and would become an attractive investment opportunity again in 2014, if we consider a time frame of between 5 and 10 years.