Spanish property market leaves crisis behind with 11pc growth in 2015

The Spanish housing market grew by 11% last year after bottoming out in 2014, reveal the end-year sales figures from the National Institute of Statistics (INE).

There were 318,055 home sales (excluding subsidised housing) recorded in the property register last year, the first time sales have risen above 300,000 a year, show the latest figures from the INE. The chart above illustrates how sales crashed from above 700,000 in 2007, to under 260,000 in 2012 and 2013, before starting to recover in 2014.

In terms of percentage growth, the housing market expanded by 11% last year, after rising 4% in 2014, suggesting that the market has finally turned around. The crash in sales started back in 2008, and declined in five of the six years between 2008 and 2013, with dramatic double-digit falls in most of those years.

Looking just at December, sales were up 8% year-on-year, meaning the market expanded every month in 2015, the first year that has happened since the crisis began.

NEW VS. RESALE

There were 77,865 new home sales registered last year, and 276,267 resales (including subsidised housing), meaning that resales were 78% of the market, down from parity as recently as 2013. The new homes market has failed to recover as quickly as resales in part due to a lack of new developments on offer, though sales may start to recovery this year as more new projects come on stream.

Of the selected regions most of interest to foreign buyers, Barcelona’s property market increased the most last year, up by 20% (resales +32%, new build -20%), followed by Cadiz province, home to the Eastern Costa de la Luz (+15%), Las Palmas in the Canaries (+15%), and the Balearics (+15%). All regions were positive with the exception of Huelva, home to the Northwestern end of the Costa de la Luz (-2%), also known as the Spanish Algarve.

ANALYSIS

With these figures in hand the spanish property market now looks to be on a growth path after years in crisis. Sales growth was particularly strong in the city provinces of Barcelona, Madrid and Valencia, plus coastal areas that attract foreign buyers like the Balearics and the Canaries. However, it is important to keep in mind that sales are increasing from an depressed base, and the market is still far from normal. If the Spanish economy continues to grow in 2016, and the supply of new homes in areas with demand increases, then it’s reasonable to expect another year of double-digit sales growth in 2016. That said, risks abound that could derail the sales recovery, including political uncertainty at home, a Brexit (UK referendum result in favour of leaving the EU), a European banking crisis, and global financial turbulence.