Spanish house prices are set to rise faster than all of the eight European countries included in Moody’s forecast.
The analytic company predicts house prices in Spain to rise by 5.5% next year, a whole percentage point above Ireland and Holland.
Germany and Portugal will see house prices grow by an average of 4% and France by 2.5% while the UK will only experienced a rise of 0.7% and there will be no change in Italy.
When it comes to the Spanish housing market there will be lower risks due to more stringent mortgage lending conditions and the rise in popularity of fixed rate mortgages, according to Moody’s.
Although Spain will lead in terms of rising house prices, it will however lose the top spot in terms of economic growth and will fall to second position – being replaced by Ireland which is forecast to grow by 3.2% compared with Spain’s 2%.
Spanish unemployment levels are predicted to fall from 14.2% to 13.4% in 2020. However, despite falling from a record unemployment rate of 26% in 2013, Spain still has one of the highest rates of unemployment in the EU; to put it in perspective, Germany and the UK have unemployment levels of only 3.1% and 3.8% respectively.
From Q4 2007 to Q3 2015, Spanish house prices fell by 41.9%, according to leading property valuation firm Tinsa, with 31 consecutive quarters of year-on-year declines. Finally, after eight long years, the market returned to growth in Q1 2016.
The market has come a long way over the past 4 years, with a recovery starting in popular holiday resorts and cities and slowly branching out across the country.
The property market is now showing signs of leveling out in those areas which were first to show signs of recovery. It does mean that there will be no boom and bust cycle (like some experts feared) but instead growth rates will be slow and steady and most importantly more sustainable.