Housing Prices Hit Rock Bottom To Revive Lending In Spanish Real Estate
The Spanish housing market experienced a major downfall, but is well poised on a recovery trajectory now. The worst housing crisis is over in Spain, with clear signs of recovery. According to the official data released by the government, the first quarter residential property sales figure of over 81,000 or 48 percent is remarkable.
Mortgage approval rates were higher for the first time in March this year since 2010. The last property boom was in 2007. Since then, the property market has fallen to a level of 47 percent. The Fitch rating in its June 5th report expected the values to bottom out by early next year.
Barcelona and Madrid heading towards recovery
Barcelona and Madrid are two cities in Spain where the recovery is expected to be faster than anywhere else in the country because the regions with infrastructure and jobs are likely to witness relatively faster recovery. The biggest increase was in Barcelona, the international holiday destination in Spain.
Compared to the first quarter of last year, residential property this year registered a growth of 1.5 percent, which was the biggest increase since 2007, first quarter, according to the data released by Idealista. However, the same source indicated that Madrid prices were down 1.9 percent, which also indicated the smallest decline in six years since the first quarter of 2008.
With the Spanish economy growing now, in the third quarter, the government has eased austerity measures. The growing trend of the economy has resulted in the creation of more jobs and increase in consumer demands. Spain’s largest cities have attracted investors wanting to invest in large blocks of residential properties. There are not many blocks left to invest, so they are planning to build more. In the city of Madrid, Blackstone - a New York based firm, entered into an agreement to acquire 18 blocks of apartments at $171 million, which equates to 125.5 million euros.
Large investors expect resurgence in Spanish rental market
The big investors in Spain’s residential property market have seen huge potential in the rental market. So, they are planning to aggressively develop the rental property market. Until now, the rental segment had been quite unorganized comprising of dispersed units held by small landlords.
The rental market is likely to be developed on similar patterns as in Holland or Germany. In these markets, large international investors dominate the rental sector. In Spain too, the big investors have entered the rental market with plans to professionalize it. They might even go on to build homes to meet the demands wherever needed.
The surge in the Spanish rental market is expected to strengthen the growing economy, rising employment, migration to big cities in search of jobs and the consequent hike in demand for the rental of residential properties. Investors are especially focusing on Barcelona and Madrid, the cities with lower rates of unemployment in comparison to the national average. The national unemployment rate in Spain is about 25 percent. It is expected that there would be a heavy flow of migrants to these cities as people look forward to migrate to big cities during the time of crisis since they offer more job opportunities.