24 September, 2015

By VIVA Team

Most experts, analysts and media agree – Spain’s property slump is well and truly over.

Fitch, one of the world’s leading credit ratings agencies, has issued an authoritative statement confirming that the fallow years for the Spanish property market are over, and projects “steady and stable” price growth over the coming years.

The report by Fitch echoes similar positivity from credit ratings agency Moody’s, which said last week that Spain’s improving property market will have a positive effect on the country’s banking sector and lending institute – a prediction given further credence by the recent news that mortgage lending is also on the mend…

Both Moody’s and Fitch were moved to comment on the Spanish property market after a tidal wave of positive figures and reports emanating from the country, not least the news that property prices rose by more than 4% in the second quarter of the year, as confirmed by the Spanish Housing Price Index (HPI).

“The HPI has now shown annual growth for five consecutive quarters, in line with our long-held view that Spanish residential property prices would stabilise in 2014-15 after seven years of decline,” said the analysis report from Fitch.

As mortgage costs have come down, credit flows are increasing, prompting more and more would-be buyers to investigate the possibility of purchasing a home in Spain. In turn, this increase in confidence helps boost property prices, which has the knock-on effect of convincing banks to loosen their lending criteria. In short, it is a near-perfect storm for the property industry.

Almost. Fitch has warned that recovery will remain slow and steady, with the estimated half a million empty and unsold properties weighing on prices in some regions, and high levels of unemployment serving to slow Spain’s economic recovery in the longer term.

However, other metrics point to a more positive outlook for the Spanish property sector, with data released by Fotocasa this month revealing that rental prices have increased 4.5% in the space of just one year. The state of a country’s rental market is inextricably linked to the health of its wider real estate sector, and Spanish rental rates are now rising at their fastest since before 2007 – which is good news for owners of holiday homes in Spain.