Busy sales in the Catalonia, Madrid and Marbella regions, led the latest surge in Spain’s real estate market. Over-supply and economic adversity are impeding the progress of recovery, while foreign property investment is at a ten-year low. See the following article from Property Wire for more on this.
The Spanish property market grew by 16% in February compared to the same month last year, according to the latest figures to be published by the country’s National Institute of Statistics.
Not including social housing, there were 35,720 home sales in February, 21,368 of them newly built and 19,665 resales. According to analysts the market has touched bottom and is starting to recovery after two years of decline but the improvement is patchy and volumes are still 47% below what they were in 2007.
An examination of the figures shows that 79% of the increase in transactions came from just two regions. Catalonia saw a 43% increase and Madrid was up 36% while the market continued to shrink or stagnate in many coastal areas popular with foreign buyers.
Malaga and Alicante saw year on year increases of 3% and 3.8% respectively and Andalucia saw a 7% rise. Granada and Cadiz were both up 14% and Valencia saw 23% growth.
Local figures suggest that Marbella is leading the way to recovery with figures from the town’s tax office revealing that 2,499 properties were sold in the first three months of this year, a rise of more than 200% compared to the same period in 2009 when just 820 properties were sold and the highest for four years.
According to Marbella mayor Angeles Muñoz the town’ will be the first out of the crisis’ and is now recovering not just from the fall in the market but also from its illegal property scandals.
She said that its new town plan, which comes into effect this month, means that some 16,000 properties will be legalized, enabling owners to sell them, raise a mortgage or use them as an asset.
Meanwhile, the latest property price index from Tinsa shows that prices fell by 5.3% over the 12 months to the end of March, a slight improvement on the previous month. The figures from Tinsa, one of Spain’s leading appraisal companies, are however based on their own valuations not actual transaction prices.
Since the peaks of December 2007, prices are down 16.2% nationally, 22.5% on the Mediterranean coast, and 13.6% in the Canaries and the Balearics.
But there are no signs of foreign property buyers returning to the Spanish market. The latest figures from the Bank of Spain show that the amount of money invested by foreigners in Spanish property has fallen to its lowest level for a decade.
Foreigners invested €3.7 billion in Spanish property last year, the lowest level since 1999, when it was €2.9 billion. Foreign investment in Spanish real estate was down 32% last year compared to 2008, and by 48% compared to 2003, when foreign investment in Spanish property peaked.
But the weak economy, high unemployment and enormous inventory of new houses will slowdown any recovery in the Spanish market, according to a report from PricewaterhouseCoopers and the Urban Land Institute into European property market trends.
And according to another recent report from Deutsche Bank, a recovery is unlikely before 2012 and it might even be 2015 before there is an upturn.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.