Spanish property prices post first sustained rise for six years

Last quarter, Spanish property was 0.6% more expensive than the same time last year

Property prices in Spain during the second quarter of the year rose year-on-year for the first time since 2008 as the country’s real estate market steadied further.

With property transactions having increased encouragingly over the past few months (rising by 24 per cent in July in Málaga province alone), it appears that the property market in Spain has turned a corner…

The figures were released last week by Spain’s finance minister, and they hint at a wider recovery for an economy that battled back last year from its second recession in five years.

According to the INE (Spain’s national statistics institute), average house prices rose by 0.6 per cent over the second quarter of this year when compared to the same period in 2013. That rise was in stark contrast to the first quarter of the year when prices were 1.6 per cent below first quarter 2013 levels. By quarter, Spanish house prices rose by 1.7 per cent, giving one of the clearest indications yet that the widespread collapse of real estate prices is a thing of the past.

“What we see is a trend towards price stabilization,” said Fotocasa’s Head of Research, Beatriz Toribio, whose words echoed earlier reports by VIVA that have long suggested a stable – rather than extraordinary – future for Spanish property prices.

Although data varies, it is widely understood that Spanish property prices fell in value by between 30-40 per cent over the past six years, and while domestic demand has struggled to return after the double-dip recession, foreign interest and investment in the Spanish property market has returned. As a result, prices have begun to rise in line with the uptick in transactions – a recovery largely driven by British buyers still drawn in their droves to Spain, particularly the Costa del Sol.

More widely, the Spanish economy has enjoyed a noticeably positive turnaround in fortunes over the past few months, and even enjoyed claiming the accolade of second-best performer across the Eurozone in the second quarter of the year. In contrast, both France and Germany suffered slumps.

“Reality has surpassed our expectations,” said Spain’s Finance Minister Luis de Guindos at a meeting last week in Madrid to present a report on the current state of Spain’s economy.

In the report, Mariano Rajoy’s recent labour law reforms and additional policy changes were praised, adding that these measures must be built upon to ensure the early shoots of recovery continue to have the required effect.

Praise was also forthcoming from the European Commission and the International Monetary Fund (IMF). Both organizations were supportive of Spain’s reform measures, but warned that more still needs to be done to reduce unemployment, which still stands among the highest in Europe.