Reporting on the current state of the residential property market in Spain, BBVA analysts found positive indications that the market is in no danger of the boom-and-bust cycle that happened a decade ago. Average property prices are also expected to rise by around 5 per cent this year, double the figure for 2017.
Assessing the sustainability of the current growth in the market is a sensible focus for analysts, given the roller-coaster ride of the last 15 years since the market crashed. But several factors indicate that the recovery and continued growth is gradual and positive.
According to the report, property sales this year will reach a normal and sustainable 570,000, up by 7 per cent on 2017. Further, the number of new homes for which building licenses are granted will increase by 15 per cent, rising to 93,000 in 2018. The figure is lower than in 2017, representing an increase of 12,000 (as opposed to almost 17,000 from 2016), but is still a positive indication that demand for housing will continue to stimulate the construction sector and maintain property prices.
Building licenses are also still only around 10 per cent of the level at which it was during the height of the property bubble between 2004 and 2008. 2017 was the first time in nine years that the number of housing units on which construction was completed rose. Clearly, the market imbalance that the excess in low-quality supply created is not something current market conditions are leading up to.