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The International Monetary Fund (IMF) published a property market analysis earlier this month, detailing the developments of four European housing markets: Ireland, Denmark, The Netherlands and Spain. All of these countries had experienced large house-price declines in recent years. It contains uplifting Spanish property market news, reporting that the Spanish property market has most likely bottomed out. However, they warn to remain cautious as various factors can still influence this year’s outcome.
On the rise
In the report, the Spanish property market together with the other countries is described to be in a trough, with house prices expected to rise again soon. This prediction would be in line with the positive property news we have reported in our blog last year, both for Marbella and Spain in general. For example, the prices of holiday homes in Marbella had risen noticeably, and Spain as a country was noted as one of the best growing international property markets.
The news is especially welcome in Spain, where the economic downturn and adverse balance sheet shocks were most severe. “Relatively more overbuilding during the boom led to larger house price declines, higher spikes in unemployment, and bigger drops in construction activity.” (IMF, 2015) Although Marbella showed early recovery in terms of construction and house prices, the fact that the whole country now seems to be recovering is a comforting thought for many interested buyers.
Caution
Things are looking up, but caution is still needed according to the report. The Spanish property market could still be affected by house price-lowering factors. For example, real interest rates have been low, helping lots of Spanish borrowers stay afloat thanks to variable-rate mortgages. However, interest rates could logically be expected to rise, putting pressure on prices. Thankfully, Spain has also put some measures into place to support the most vulnerable home owners, preventing a major build up of debt, amongst others.
Future
The Spanish property market news shows that, although slowly, the market is regaining its strength. The fact that it has most likely bottomed out means interested home-buyers who have decided to stay on the safe side, can now begin their search for a new home. Cautious buyers interested in a luxury home should considered areas such as Marbella, which has seen early signs of recovery and a relatively steady demand in high quality property. For an impression of what’s currently on the market, view available luxury properties in Marbella here.
Source: IMF multi country report. Housing recoveries: cluster report on Denmark, Ireland, The Netherlands and Spain. January, 2015.
