The real estate market in Spain was hit hard in 2008 when the recession hit and all the transaction levels conducted before the recession were recovered. However, despite the property prices remaining low, the official figures continued to show.
Boosted by a strong economic growth in 2017, approximately 465,000 real estate purchases were noted in the year - 'the highest annual figure since the 2008 crash', according to a report by the Spanish national property register. This represents a rise in property prices of close to 15% since the previous year of 2016.
At the end of the 20th century, the country experienced a property boom with property being at the highest sales prices in many years. However, when the bubble burst in 2008, the global economic recession caused a reduction in the Spanish economy; thereby, preventing the majority of borrowers from repaying all property loans. Prices collapsed and only began rising again in 2014 when the recession in Spain ended.
According to national statistics, property prices increased to a point of approximately 7.6% in Spain during 2017 as compared to 2016. Yet, they remain a full 21% lower than the price experienced during 2007 before the bursting of the real estate bubble in 2008. The growth of the economy in Spain during 2017, buy approximately 3.1%, boosted the recovery of the property market.
According to the Moody real estate agency, lower interest rates along with a reduction in unemployment (although it still remains high), has contributed to the 17% in 2017 price change from a record 17% property price in 2013. This, according to the Moody agency, is what is supporting affordable housing within Spain.
Moreover, the report states that while it is likely that real estate sales will exceed 500,000 properties during 2018 for the first time in ten years, this is far from the one million yearly housing sales experienced before 2008. Construction of real estate properties is at a low of 40% pre-crisis levels, as compared to 2007, due to partially correctly the oversupply in certain areas before the crisis.
According to the national register, approximately 13% of all real estate properties in Spain were purchased by overseas buyers in 2017, namely French and UK nationals. In the particularly touristy areas, the proportion is higher; for example, the Balearic Islands where foreign property ownership is 35%, or the Canary Islands where the overseas buyer property ownership is 29%.
Lucas Fox, a top end real estate agent, reported that the capital, Madrid, was one of the hottest real estate markets in Spain at the moment. This real estate company, specialising in high-end properties, announced a 92% increase in the number of property sales, along with a 31% increase in the value of these properties during 2017.
According to the property website Idealista, the property prices in Madrid increased by approximately 12% from 2016 to 2017. Furthermore, prices in the city centre increased by 22% during 2017; however, the prices increased by 19% in areas such as Salamanca and Chamberi.
The Tenerife property market as well as the other major islands seem stable and look set to continue their upward climb due to increased demand from visitors wanting a better lifestyle.
Several agents have been monitoring the property market in the Canaries and have noticed an uptick in the enquiries for properties in premium locations across the islands which is also a reflection of the Spanish property market as a whole.
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