The downward spiral of Spanish property prices is starting to show signs of bottoming out, according to economic experts.
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Although prices are beginning to level out, International Monetary Fund economist James Daniel warns that general economic malaise in the country is hampering any real revival.
The news will cheer some expats who could see no end in sight to their financial misery of being trapped in Spain when they want to return home to Britain.
Many have their cash tied up in property and could not sell because of negative equity or the housing slump.
Hundreds of thousands of properties are on the market and only selling to cash buyers, who have the pick of the crop.
Property glut
Spaniards are finding mortgages almost impossible to come by and the glut of properties is pushing down prices even further.
Just over 1 in four of the working age population are jobless, so although a green shoots recovery is detectable, no real life will be seen in the market for some time yet, explained Daniels.
“The economy has turned a corner,” he wrote in his report to the IMF. “The government is working to make the economy better and these efforts are showing some success. We feel the economy is growing slowly but still at the fastest rate since 2008.
“The property market is positive and there are no signs of a house price bubble. Prices and property transactions will improve, but very gradually.”
Official property transaction statistics from the Spanish Property Registrars for the first quarter of 2014 has seen the number of homes sold rise by 14% in comparison to the same quarter the year before.
Housing supply problems
During the first three months of this year, just over 83,000 homes were sold – comprising 37,700 new builds and the rest secondhand properties.
Despite these cheerful figures, the year-on-year statistics present a different story.
In the year, sales were down 8.22% and the number of new homes built dropped 18%.
“House prices may have kept dropping for six years, but the evidence points to an end of this cycle and a period of price stability,” writes Daniels.
“One problem that needs solving is housing stock supply. Few new homes are being built and many of the homes for sale have been repossessed by banks at discount prices. This stock will gradually fall and the number of new homes available will have to expand to take up this slack in the market.”
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