In the financial institution Bankinters last half-yearly report on the state of the Spanish property sector, it is expected an increase in property prices of 5% in 2016.
The Madrid-based bank justifies the increase with the fact that the real estate sector in Spain is growing again, and that the sale of homes is steadily increasing. House prices in Spain got its first cautious increase (0.8%) during the second quarter of 2014 after six years of decline.
For the current year they conclude that at the national level will increase about 1.5% on average. The total number of sales should land at about 400,000 this year and increase to 450,000 in 2016, according to Bankinter.
The unsold inventory of 500,000 new homes is not seen as a problem by Bankinter. 100,000 of these homes will never be sold because they have too uninteresting location. But there is now a deficit of housing in Spain’s most sought after areas and this will be covered with new buildings and renovation of existing buildings.
The bank sees economic growth as essential to inflation and stresses that Spain’s GDP is expected to grow by 2.2% this year. This in turn will lead to the creation of about 417,000 jobs, and the increasing employment regarded as important for a recovery in the property sector.
Finally the bank believes that real estate has become an increasingly attractive investment option with rental opportunities as an extra bonus. This can be compared with the considerably poorer returns from other investments such as government bonds or savings accounts.
Bankinter is not the only to believe in growth in the coming years. Among several others, the US credit rating agency Standard & Poor comes with a similar analyzis, albeit with slightly different numbers.
Standard & Poors has predicted 2.5% growth in house prices in 2015 and 2016 followed by a 4% increase from 2017. According to their data Spain’s downward trend ended in 2014, when prices stabilized. They say that the country’s economic upturn combined with low interest rates, the real estate market now has really taken off in Spain.