Spanish house prices increased 2.67% during the year to end-Q1 2017 (0.38% inflation-adjusted) to €1,385 per square metre (sq. m), the fifth consecutive quarter of y-o-y house price rises, according to TINSA. Quarter-on-quarter, house prices rose by 3.2% (4.1% inflation-adjusted) during the latest quarter.
Spain’s housing market finally returned to growth in Q1 2016. Spanish house prices had fallen by a total of 41.9% (46.8% inflation-adjusted) from Q4 2007 to Q3 2015, based on figures from TINSA. There were 31 consecutive quarters of y-o-y declines:
- In 2008, Spanish house prices fell 8.75% (-10.05% inflation-adjusted)
- In 2009, house prices fell 6.57% (-7.23% inflation-adjusted)
- In 2010, house prices fell 3.85% (-6.67% inflation-adjusted)
- In 2011, house prices fell 8.17% (-10.28% inflation-adjusted)
- In 2012, house prices fell 11.34% (-13.82% inflation-adjusted)
- In 2013, house prices fell 9.19% (-9.44% inflation-adjusted)
- In 2014, house prices fell 2.96% (-1.96% inflation-adjusted)
- In 2015, house prices fell 1.71% (-1.71% inflation-adjusted)
- In 2016, house prices increased slightly by 1.67% (0.1% inflation-adjusted)
Demand is now rising strongly. In 2016, the total number of home sales in Spain increased 14% to 457,689 units from the previous year, according to the InstitutoNacional de Estadistica (INE). This rise in transactions was mainly driven by foreigners buying homes on the coast and in cities like Barcelona and on the Costa del Sol, one of the country’s most popular areas with overseas purchasers. Most foreign homebuyers are Britons, French, Germans, Belgians, Italians and Swedes.
Foreclosures fell by 31.3% to 41,129 dwellings in 2016 from a year earlier, based on figures from the INE. Foreclosures dropped 33.6% for new dwellings and by 30.9% for existing dwellings.
The outlook for Spain’s housing market is now upbeat, with house sales expected to rise by between 10% and 15% to reach about 520,000 to 545,000 transactions this year, according to TINSA.
“We believe that a growing economy, low financing costs, good potential for rental returns and capital appreciation will continue to drive sales throughout 2017 and beyond,” said Lucas Fox International Properties.
Nationwide house prices are also projected to increase by about 2% in 2017. More specifically, house prices are expected to rise by 7% in Barcelona and by 4% in Madrid, according to housing market analyst Borja Mateo.
“The price recovery now taking place in Madrid, Barcelona, and certain tourist zones of the coast will extend to the suburbs and other parts of the country,” forecasts Beatriz Toribio of real estate portalFotocasa.
In the first quarter of 2017, the economy advanced 0.8% from the previous quarter, the same as in the same period last year, making it as one of the fastest-growing economies in the European Union. On an annual basis, Spain’s GDP expanded by 3% in Q1 2017. The economy is expected to grow by 2.8% this year, after growth of 3.2% in 2015 and 2016, and 1.4% in 2014, and contractions of 1.7% in 2013, 2.6% in 2012 and 1% in 2011, according to the Bank of Spain.