After years of misery for Spanish homeowners, home prices in the favourite expat destination are rising again.
Price increases are expected to touch 5.5% by 2018 as the market picks up, according to upbeat real estate consultancy Anticipa.
The firm has called in a Spanish academic to scrutinise the market – and his report is good news for expats who thought they were trapped in negative equity for years after the downturn.
Following the credit crunch, home values plunged by up to 50% in some regions, leaving thousands of British expats who wanted to return home with no choice but to remain as mortgage prisoners.
Most owed more to the banks than their homes were worth, and even if they could repay the debt, they could not afford to buy back home.
Sales to rise
Now, the report by economist Josep Oliver for Anticipa gives them real hope that their fortunes will turn around.
He argues that sales will rise by 8% to 454,000 next year and then by 6% to 480,000 in 2018.
That will pull up home values, he says, but Spain needs to attract more immigrants or witness a huge change in economic performance to see the market move on from there.
Oliver also explained that although the market was rising, the start was from a low point.
In 2006, 908,000 homes were sold and even after two more years of bouncing back, they will remain 24% off their 2007 peak.
“It’s a recovery, but in absolute terms it’s a long way from what you can call a boom, which means it is more sustainable,” said Oliver.
Foreign buyers drive market
One factor pushing the market forward is the number of foreign buyers.
A separate report from Spanish property registrars noted that 17.5% of all homes that exchanged hands in the first six months of the year were bought by foreigners.
British expats and second home owners were that largest group of foreigners – responsible for around a fifth of all purchases by non-Spaniards.
The favourite destination is the Costa del Sol, according to the registrars.
Spanish home prices are following the same upward trend as those across the Eurozone, but the European Central Bank says the inflation is of no concern and that no bubble has been detected.
