Rising house prices in Spain
After a seven-year decline in house prices all over Spain, the market is finally picking back up again. In fact, prices are now increasing in line with the European rising average. Now is the ideal time to invest in the Spanish real estate sector, with house values predicted to continue going up. We’ll explain in more detail:
The rise in house values during the last trimester of 2016 across the Eurozone was 4.1% and 4.7% over the whole European Union. Spain has found itself right in the middle of the table at 4.4%, in line with the European averages.
In June 2016, Spain experienced a three-year high, registered as nearly 37,000 homes changed hands, which was a massive 19.5% increase from the same month the previous year.
Another factor to analise is foreign investment, the main driving force behind residential construction, with construction and real estate accounting for more than a third of the nearly €22 billion of foreign investment in Spain in 2015.
After the steep decline following 2007, foreign investors started to return to the Spanish property market in 2014. In 2015, foreign homebuyers bought around 48,000 homes in Spain, a 13% increase from the previous year, representing about 13% of the total home sales across the whole of Spain.
Looking at Cataluña separately, average house prices in the country’s second largest region increased by 6.82% to €1,567 per square metre in the second quarter of 2016.
A recovered real estate sector
Spanish interest rates are typically low, which is one of the principal factor behind the great Spanish housing boom between 1991 and 2006. The boom was fueled by 15 years of dramatic reductions in mortgage interest rates from 17% in 1991 down to below 3.5% in 2005. Following the post-crisis European Central Bank key rate reductions, average interest rates on mortgages continued to decrease even further, down to 2.61% in December 2012, all the way to 1.41% in April 2016.
So, what does all of this mean for prospective buyers? After years of decline, the Spanish property market is beginning to regain its value. Mortgage interest rates are still extremely low and house prices are only going to increase. All of this together creates the ideal situation for prospective home buyers; a great opportunity to invest in properties in Spain.