A new report from financial services firm JP Morgan predicts that Spain’s economy is set to grow by 1% in 2014 having seen encouraging results in industrial output, exports and consumer spending and confidence. It believes that Spain’s economy has healed enough and its banks are now well capitalised.
La Caixa, the third biggest bank in Spain, forecasts that unemployment will start falling in the second half of this year, helping to bring the adjustment in house prices to an end. It takes the view that a gradual economic recovery is more likely than not in 2014, adding that ‘the risk of a new slump appears limited’.
According to Mark Stucklin for Spanish Property Insight an improved economy will lead to more stable house prices but he doesn’t think price growth will be immediate. ‘Average house prices are expected to continue falling for the immediate future, although some housing market segments could buck the trend,’ he said.
He also pointed out that the improving economic outlook has to translate down into the lending market. This is likely, according to experts cited in the Spanish press. Gonzalo Bernardos, a professor at the University of Barcelona, for example, said that he believes the banks will start to lend again in the second half of the year.
Meanwhile, sales are improving more than expected. Chris Mercer of Murcia based agents Mercers, had predicted that sales would rise by 25% in 2013 compared to the previous year but said that his firm saw an increase of 60%.
And it is the British buyers who are coming back to the Spanish market. In 2012 the firm found that it was Belgians, French, Norwegians and Swedes dominating the market, with Brits only reappearing to the latter part of the year, along with a few Germans and Dutch. But last year 64% of sales were to British buyers.
Sales prices were also up last year. In 2012 the average sale price was €84,884 and this increased to €94,000 in 2013. ‘Property prices have held pretty steady for several months now. I do not think that prices in our part of Murcia will slide further, but neither do I think that they will increase in the first three quarters of 2014. Since the peak, prices have dropped 40% to 55% and we are now in a situation of every day low prices,’ explained Mercer.
‘Coming off the back of a very strong 2013, I predict a further increase in sales volume for Mercers in 2014 as buyer confidence continues to grow. If bank lending finally improves, then the market will accelerate across the board but, again, I do not think that is likely for the first three quarters of 2014,’ he explained.
‘It is reassuring to see the British contingent participating so heavily in Murcia and I expect them to carry on leading the charge this year. And, this time, I will stick my neck out and predict at least a 30% rise in sales for 2014 over 2013. A lot depends on the Paramount Theme Park, which is now in the first stages of construction and on schedule for a 2016 opening. But, even without this tourist attraction, the general climate and appetite for foreign property buying is on the up,’ he added.
Costa Blanca firm HomeEspaña saw a 30% increase in demand for property in resorts along the Costa Blanca in 2013 compared to 2012 and believes this growth will continue during 2014.
The firm aims to build on the success of 2103 in terms of sales to British and other foreign buyers. ‘We're certainly seeing signs of stabilisation in the market, with prices in established, sought after areas no longer falling and silly offers way below the asking price rarely being accepted for quality properties. The strengthening UK economy means the exchange rate should remain favourable to British buyers too, which is a bonus,’ said Kieran Byrne, managing director of HomeEspaña.
He expects key resorts on the Orihuela Costa to remain in demand in 2014, with properties near the beaches at Playa Flamenca, La Zenia, Punta Prima and the town of Torrevieja to be especially popular. Also the resorts of Moraira and Jávea, as well inland in the Orba Valley and Jalón Valley, will continue to gain favour with British buyers.
‘The average spend for properties in the south is now around €125,000, but there are apartments and town houses available for less. In the north we're seeing sales go through in the €200,000 to €400,000 bracket. Inland, things are more affordable and we expect savvy buyers to continue to snap great value villas, which combine a rustic Spanish lifestyle with easy access to the north's stunning beaches,’ said Byrne.
‘Opportunities in 2014 won't be limited to discounted resales either, as we're seeing a definite interest in new build projects again, with some excellent beachside developments on our books selling out quickly,’ he added.
