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.
The boom ended abruptly in 2008. The housing slump battered the Spanish economy and brought spiraling unemployment. Developers were left with blocks of unsold properties and massive debts. Uncertainty engulfed the market.
Despite the price rises of 2016 nationwide house prices are still 39.4% below the peak levels seen before the global crisis.
Spanish house prices increased 2.67% during the year to end-Q1 2017 (0.38% inflation-adjusted) to €1,385 per square meter (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.
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 Instituto Nacional 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.
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
On the Mediterranean Coast, house prices increased over the past year by1.9% to an average of €1,413 persq.m.according to the INE.
In Andalucia, land prices rose over the past year by 15.7% to an average of €167.1 per sq. m.according to the INE.