Spain to be third in EU for highest house price rises
In a recent European Commission report, Spain and Ireland, two of the countries worst-hit by the property crisis, will see house prices rise substantially over the next couple of years.
In fact, Brussels has calculated that the value of property in these two countries is expected to rise by 6.5% in the case of Ireland, and by 6% in Spain. House prices in Malta are also forecast to increase by the same amount as prices here.
However, while property prices will recover slightly, the EU has warned that the amount of credit borrowed to purchase real estate in many countries diminished in 2015. This is the case for Spain, as well as Ireland, Greece, Portugal, Hungary and Lithuania.
Greece seems to be in a different situation to many other EU countries. While better credit conditions offered by the banks have been one of the main reasons that the property sector has been able to get back on its feet, in Greece, property prices are still likely to fall this year by 1.5%.
And, the EU reckons that house prices will also decline this year in three other countries: Belgium, France and Bulgaria.
The Commission also indicated that average households in many countries have less disposable income than before. For example, in 2014 a typical Spanish family’s disposable income registered at 10.1 times the average income, which is a lot less than the 15.6 times registered in 2007 at the height of the property boom.
And it’s not only the amount of disposable income available that has changed over the years, other aspects have too. First of all, the number of transactions completed over one year has diminished greatly.
According to the National Statistics Institute, 2015 closed with 354,132 operations, which is a similar figure to 2011. However, this is less than half that reached in 2007 of 775,300.
In addition, the amount borrowed from the bank to take out a mortgage has also changed. Between 2006 and 2007, a total of 300,000 million euro was given out by Spanish banks to those that wanted a mortgage. This has dropped in the last seven years to just 41,000 million euro.
The average amount lent per single mortgage has declined 37% from the boom years, to 106,655 euro in November 2015.