Spanish housing market expected to recover in 2014

 

March 12 (Xinhua) — An expert says Spain’s housing market, especially the high end, will show signs of recovery in 2014, as most of the macro-economic indicators improve and investor confidence grows.

Pablo Mompo, director general of Quick Telecom, a real estate and internet investment company, said there was a growing interest abroad in buying properties in Spain following the fall in house prices due to the financial crisis.

Purchases by Spaniards decreased from 488,869 in 2007 to 274,784 in 2013 owing to rising unemployment and fewer people qualifying for a mortgage while purchases by foreigners plummeted from 57,768 in 2007 to a low of 16,480 in 2009, Mompo said.

The recovery of most European economies, faster than that of Spain, and the arrival of new players in the market, such as Russians, have led to heating up in the international market, according to Mompo.

In 2013, the number of purchases made by foreigners rebounded to 34,469 as house prices continued to fall in Spain, he said.

House prices had fallen by an average of 40 percent since the outbreak of the crisis, Mompo said, adding coastal areas, where there was a glut of newly constructed but empty properties, many of which had been reclaimed by banks after their owners ran into financial problems, saw a 60 percent fall in house prices.

Mompo said the nationalities of foreigners buying homes in Spain had also changed significantly with the withdrawal of Latin American buyers, who were badly hit by the crisis and planned to return to their homelands.

Their departure had been offset by the arrival of newcomers. In 2013, almost 4,000 Scandinavians bought properties in Spain and there was a tenfold increase in Russian buyers between 2007 and 2013, Mompo said.

Most foreign buyers looked to buy houses on the coast, where there was still a high degree of overstock, Mompo said.

He added there was also another kind: the “high-standard” buyer who preferred to buy houses in exclusive residential districts of Madrid and Barcelona and high-class areas in the southern Costa del Sol and the Balearic Islands, an archipelago in the western Mediterranean Sea.

Average house prices in Madrid and Barcelona fell by about 30 percent during the crisis, less than those in other parts of Spain, Mompo said, adding there were signs this sector was starting a timid recovery, driven partly by foreign buyers, including Chinese buyers.

Statistics show the number of Chinese people buying houses in Spain has grown steadily in the past five years from 427 in 2009 to 1,054 in 2013 and most of them are non-residents, who generally have far greater purchasing power than residents.

The recent approval of a law in Spain granting residency to non-EU citizens who spend 500,000 euros (about 697,600 U.S. dollars) or more on a home in Spain also contributed to the increase in foreign investors.

Published: http://news.xinhuanet.com/english/business/2014-03/13/c_133184464.htm