The first quarter of 2018 has been a good one for the Spanish housing market. In January, February and March, the value of used housing rose by 2.2%. This represents a strong nationwide increase, and a continuing reflection of Spain’s positive economic outlook. Several regions have performed particularly well; the Balearic Islands has seen quarterly used property prices grow 5.5%, Madrid 5.1%. A strong showing in the capital is reflective of a centrally driven domestic revival, which is now evidently being felt further afar. The Balearic market is benefiting from a growing number of Spanish buyers, who are in the majority, but also from a robust international minority of buyers- who account for 37% of all transactions.
February gave its best showing since 2011, with year-on-year growth in the number of property transactions at an impressive 16.2% increase. This builds on encouraging figures from 2017, where Andalucía and the Communitat Valenciana did exceptionally well. A likely driver has been an encouraging surge in the number of mortgages issued; rising 36% from 2014 to 2017. The risk of another housing bubble is at this time negligible, because of lending safeguards that remain in place, and because the number of credit purchases remain at a safe proportion of all transfers.
Spain’s economic recovery continues to look promising in 2018. Q1 leaves annual growth estimates at 2.9%, better than the Eurozone’s 2.5% expansion in 2017- its strongest figure since 2007. The charge is being backed by an energetic Export industry, and a recent easing of political uncertainty over the Catalonian crisis. Government estimates have also forecasted that unemployment will fall to 11% by 2020, currently at 16.5%. With this in mind, the stage is set for continuing positivity in the property market- especially as domestic demand carries on driving. That said, talk from the European Central Bank that monetary policy may be ‘normalised’, i.e. higher interest rates, may slow further developments; the same can be said of the Catalonian crisis, should it take on new vigour.
One can, however, look to the rest of 2018 with confidence. Last year was an undeniable success, its momentum has been carried forward, and current signs point towards further growth.