Spanish optimism fuelled by fall in jobless numbers and rising property interest

Property prices in Spain are creeping back up as economic confidence returns

For the first time in ten years, the number of unemployed people in Spain fell slightly in the final quarter of last year, according to a recently released labour market survey.

The news is further proof that Spain’s economic recovery is more than mere wishful thinking. Confidence in the Spanish economy has attracted foreign investment in the country’s property market and industry – particularly its car industry – while government reforms have helped steady its labour market…

However, the survey warned that steep challenges remain for Spain, not least in finding ways to get the 5.9 million unemployed back into work. Despite positive figures at the end of 2013, the unemployment rate remains around 26 per cent – the second-highest in the EU after Greece.

Between the third and fourth quarter of last year Spain added 8,400 jobs. Year-on-year, there were 69,000 more people in work during that period than the same time in 2012. The improvement was the first time since 2004 that jobless numbers fell in the final quarter of the year.

“We have reached the bottom of the hole,” said Juan José Dolado, professor of economics at the European University Institute in Florence. “We are not falling any further.” The professor did warn that the recovery will be slow, predicting the unemployment rate to fall to just 24 per cent over the course of the year.

Forecasts from the government suggest a similar pace of growth. GDP is estimated to rise by 0.7 per cent this year, with job growth expected for the second and third quarters.

For Spain’s property market, confidence levels are returning to their pre-bust highs, with a recent report from Price Waterhouse Cooper (PwC) – titled Emerging Trends in Real Estate Europe 2014 – suggesting that 67 per cent of leading investors polled believe that there are good buying opportunities in Spain.

And where investors lead, price rises follow. Data from a JP Morgan survey reveal that the average sale price for a property in Spain was €84,884 in 2012. That figure rose to €94,000 last year, with further price increases predicted for 2014. Any increase is likely to be low, however, with prices across the board still approximately 40 per cent below their 2007 peak.