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The Spanish real estate sector has shown a positive trend in its prices over the last 12 moths (see Graph above), although we are still far from recovering the level of activity of previous years. Sustained real estate price growth requires a greater adjustment of the existing unbalances, more depth in the pending structural reforms and an improvement of the European environment.

The Spanish economy grew during 56 consecutive quarters from 1994 to 2007. The expansion of banking credit to families and companies from abroad nurtured the «years of wine and roses». The outbreak of the international financial crisis caused the real estate bubble to burst, as a result of which the Spanish economy plummeted into a deep recession in 2008-2009. The sovereign debt crisis of some european countries pushed the Spanish economy into a second recession in 2011-2012. The latest aggregated data reflect a fragile recovery during the last five quarters, subject to many uncertainties in the forecast of the 2015 prospects.

The internal demand of families is beginning to grow from very low levels, given the available income and the deleveraging process. Companies are also registering increased sale orders, inducting investments in capital goods within a framework of generalized deleveraging. And the real estate industry is finishing the heavy digestion of its surfeit, after adjustments of up to 90% in new building permits, finished home or promoted-builder and mortgage credits.

Barcelona house prices have been falling for seven years, with a total decline of 40% (46% inflation-adjusted) from the values reached in mid 2007, before the crisis. In any case, the trend of negative price variation seems to have changed and we think we have hit the bottom. Over 2014, prices of real estate industry have grown by 4,4% and 2015 figures are also positive (see Graph above). 

Spain’s housing market is now recovering, amidst gradually improving economic conditions.

The improvement is mainly driven by foreign property buyers, it’s crazy the number of investors coming in. We think 2015 is the year where we will see a lot of transactions.

The average price of second-hand properties in Barcelona is 3,298 euros per square metre, which means that prices have go down to 2003 level.(see Graph above). 

Prospects 2015

The central scenarios forecasted as regards Spanish economic for the year 2015 involve a fragile recovery of the GDP and the correction of its structural imbalances. However, the uncertainty of the foreign environment as well as some of the domestics factors such as deleveraging, public deficit, bank credits, dependency of foreign financing, etc. can contribute to the frustration of the recovery scenario of the Spanish economy which will affect directly Barcelona real estate recovery.