Wednesday, April 22, 2009

Signs of recovery in Spanish market

The eagerly awaited March Spanish house price index from Tinsa is, unfortunately, not good new but it appears to be the beginning of the end of the worst period for property sales in Spain since the crisis began, according to a property expert.

According to kyero .com, when comparing January 2009 performance with January 2008, the index (and therefore house prices) had decreased by 10%. The Tinsa index for February 2009 shows this rate of decline slowing to 9%. The March edition of the Tinsa report shows their index decreasing by 9.7% - more than in February, but less than in January - by a whisker. There's no sign of a recovery in the Spanish property market according to Tinsa index but there is also no further damages.

Gonzalo Bernardos, a property market expert and professor of economics at the University of Barcelona, argues that Spanish property market will come back to life this year, after a dismal 2008. He comments: "the reasons are Interest rates are lower; house prices have fallen back to their 2003 levels; banks are lending more; investors are coming back; and many people who were thinking of renting have decided to buy."

The housing starts picked up in the last quarter of 2008, rising by 7% compared to the previous quarter is a positive sign, so far this year sales have been between 25% and 40% higher than in the same period last year.

Another real estate analyst cited say that sales rates at new developments have picked up considerably. This is the time for buying in Spanish real estate "In many developments properties have sold more in the first quarter of 2009 than in the whole of 2008," he says, also arguing that prices have already bottomed out. Whilst Bernardos expect the market will pick up soon but doesn't expect the prices to start rising soon.

"Sales will start to rise in 2009, whilst prices will stop falling in most places by the end of 2010," writes Bernardos in his report.