The long period of declining house price seems to be coming to its end. This is according to the latest data on the spanish real estate sector conducted by Fitch Rating, a respected credit rating agency. They have reported about the end of the declining property prices but they warned about the “slow and uneven” recovery of Spanish real estate.
They also stressed that “the improvement in the supply of credit will support the housing market but the fundamental weaknesses, particularly in some regions, imply that the recovery will be slow”.
The Spanish Real estate crisis started in 2009 but it was in the 4th quarter of 2014 when a 1.8% increase in terms of the housing prices occurred which showed a sign of recovery. This is far the largest increase that happened since 2009. In relation with the shift in 2014-2015’s Spanish property market, there is a big adjustment that ranges from 35% to 40% for house price. To be exact, the Spanish real estate market has been in seven years of decline, so these increases are in line with reasonable expectations.
One of the main reasons why the house prices are showing signs of recovery is due to the return of credit. This is the thing that the agency has considered and believes, what has made some changes in the Spanish economy. According to their forecast, the coming two years will bring improvements to the economy and even strengthen the support for mortgage market. They have seen 2% of increase in 2015 and in 2016, they forecast 2.3%, respectively.
However, Fitch has stressed the issue about the basic real estate market conditions which are still relatively weak. The unsold homes’ excess which is stock built from 2006 to 2007 and high unemployment rates and recovery of the Spanish property prices seems to be preventing a quicker recovery.
According to Fitch’s opinion, there will be two speeds of recovery for these sectors. The large stocks from those homes which are not yet sold, will still remain weak. Most of these homes are from the borders of big cities and others in lower end coastal regions. The prices for these homes will still decline into 2016. In contrast, Fitch predicts that the important areas around the big cities of Barcelona and Madrid will most likely have an acceleration in increase of prices.
Still according to Fitch, they are not expecting for a fast shift of prices for the whole country, instead, they are expecting a slow movement for its recovery especially on nominal house prices. These said condition will remain stable for 2015 but will show an upturn during 2016.
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