House prices in Spain recover, but slowly
House prices in Spain have started to recover after having suffered a sharp fall during the crisis, although the rate of growth is very slow and everything indicates that it will continue to do so for quite some time.
In the second quarter of 2015, house prices rose 4.2% compared to the previous quarter, according to data published by the National Institute of Statistics (INE). This recovery in the real estate market extends for the first time to all the Autonomous Communities, highlighting the largest increases in the quarterly rate in Catalonia (5.4%) and Cantabria (5.1%). On the other hand, other regions registered less significant increases, such as Extremadura (it rose one tenth) and Galicia (it increased three tenths).
These data represent a change in the trajectory of the furniture sector, since it is the biggest rise experienced by the sector since 2007, when it suffered the effects of the real estate bubble. However, its effect has been limited with respect to the stock of flats that are unsold in Spain. Since, according to the report by the rating agency Fitch Ratings, there are around 150,000 "unsaleable" newly built homes out of a stock of 600,000 units.
In this report, the Fitch agency points out that the poor location of a considerable number of newly built homes and the deterioration of these properties, reduces the opportunities for sale. That is why this recovery in the Spanish real estate market is uneven, since we find that the number of unsold homes in the urban center is lower than in the periphery areas or in more depressed neighborhoods; location in areas without transportation, health or education services. Thus, these types of properties do not have the same appeal and drive as other well-located homes with greater services to offer to citizens.
To this problem of location, we add the poor condition in which many of these "unsaleable" homes are found, especially the repossessed flats. So the real estate market is growing at a good pace, but it does so in large cities and in well-located homes, with zero growth in those properties that do not have a good location.
Meanwhile, what will happen to prices? According to the Fitch agency, the recovery in prices will remain stable and will not grow at high rates. However, factors such as unemployment and wage income will continue to affect buyers' decisions. Well, it is a great effort for the person to choose a residential apartment, whether new or second-hand. It is for this reason that many of the young people delay their emancipation.