Signs that the Spanish property market is recovering

While not all observers of the Spanish property market are filled with confidence for the latter part of 2016 and early 2017, there are at least some reasons to be optimistic. It is always the case when a market is on the turn with pessimists trying to drive prices lower while optimists try to encourage more activity. The experts at BBVA Bank are the latest join the more positive bandwagon with an array of observations about the Spanish property market and the Spanish economy.

So, while the European Union is still experiencing difficult economic conditions why should we be more positive about Spain in the short term?

Economic indicators

The most recent employment indicators are suggesting that the Spanish economy is starting to show signs of life after a very difficult period. It is no secret that unemployment in Spain has been relatively high for some time with the younger generation taking the brunt of the downturn. This obviously has an impact upon funds available to acquire property and hence a knock-on effect on property prices.

There are also signs that relatively low mortgage interest rates are starting to attract potential property investors looking to take advantage of relatively low property prices. All in all, it will take some time to recover to anywhere near previous levels but activity in the Spanish property market does appear to be at least turning upwards in the short term.

Oversupply issue being addressed

There has been an oversupply issue in the Spanish property market for years now. Many prominent Spanish construction companies overextend themselves on far too optimistic forecasts for the future and ultimately paid the price. This led to a glut of supply in the domestic property market although thankfully there are signs that this overhang of properties is now being eroded. The fact that demand for land for future property developments has also increased over the last few months is another positive sign.

The aftermath of the 2008 worldwide recession also saw many Spanish banks left with unwanted properties after many of their customers defaulted on mortgage obligations. We have seen a number of relatively high value and high profile deals with investors acquiring some of these unwanted properties and more will follow in the short to medium term. This will help replenish the balance sheets of leading Spanish banks which will ultimately allow them to give their customers greater service and increase the flow of funds available.

Performance will vary from region to region

The analysts at BBVA Bank have also been quick to point out that the forecast recovery in Spanish property prices will not be unilateral across the country. There could potentially be some significant price movement differences from region to region therefore investors looking at Spanish property will need to be selective and do their research.

Even though, in the eyes of many, the future of the European Union is in doubt after the UK electorate decided to leave, there could still be some relatively attractive bargains emerging in the short to medium term. In reality the European Union is almost certain to survive although the manner in which it operates and the future structure could see some significant changes.

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