Spain Property News

S & P Predicts End of Falling House Prices in Spain for 2015

S & P Predicts End of Falling House Prices in Spain for 2015
The collapse in house prices recorded in Spain in recent years could come to an end next year, when the real estate sector will experience a moderate recovery as a result of improving economic conditions and the growing interest of foreign investors, says the ratings agency Standard & Poor’s, which also warns that the revival of the ‘brick’ will be limited by the glut of homes for sale and the anticipated loss of population.

The ratings agency predicts a 2% decrease in house prices in Spain during 2014, compared with the decline of 4.6% in 2013, which will come to an end next year, when S & P expects prices to remain stable, while in 2016 they will register an increase of 2%.

“We think prices will continue falling slightly this year, to hit bottom in 2015, and begin to rise in 2016,” said the agency’s report, which also highlighted the “much faster than expected” improvement in the fundamentals of the Spanish economy, which will facilitate a “more rapid” decrease in unemployment.

In fact, the agency has recently raised its growth forecasts for Spain to 1.3% for this year and 1.8% for the following two, which stands significantly above the average outlook for the eurozone.
Also, El Economista reported that the ratings agency are confident that the unemployment rate in Spain will close 2014 at 25.2%, and from there gradually decrease to 24% in 2015 and 22% in 2016.

Despite the improved outlook, S & P indicated that in the long-term the housing sector in Spain will be weighed down by the ‘stock’ of homes for sale, although they are confident that “foreign investors will help to put a floor on the prices”.

However, looking to the future, the agency warned that the demographic trends in Spain represent a threat to the recovery of the housing market, saying: “A population decline will clearly limit the potential growth in demand for housing in the next decade”.