Spain's banks are advancing more loans to homebuilders and dramatically cutting their borrowing costs as sales surge, Bloomberg reports. The recent article paints a rosy picture of the Spanish property market, contributing to the general consensus that the once ailing industry now finds itself in a healthy state of progressive growth.
Eight years after Spain's property bubble burst and banks all but froze their credit allowance to property construction, CaixaBank SA, Spain's third-largest banks will this year lend 1.4 billion euros for developer financing, more than twice the amount in 2015. Joan Bertran, head of real estate investment at Banco de Sabadell SA said Spain's fifth largest bank approved 850 million euros in loans as the value of some new-builds rose as much as 10 per cent. The bank forecasts that Spain may build between 100,000 and 280,000 new units per year in coming years, compared with just 39,891 units last year and a peak of 597,632 in 2006.
"We foresee that new supply won't keep up with demand and that will translate into healthy house price growth for these new-builds," Bertran told Bloomberg in an interview. "Now is the best moment to finance and we want to gain a share in this market."
Jaime Pinilla, director general of CP Grupo, reiterates the confidence that lenders are feeling nationwide, saying that so many homes are now being financed that the main issue facing developer already is the scarcity of land on which to build. "Demand has risen significantly in the last year and it’s down to the fact that the final buyer has more confidence".
Ignacio San Martin, chief economist for real estate at BBVA, Spain's second-largest bank said the country's real estate market is also luring international investors as falling unemployment, higher disposable income and record-low borrowing costs boost demand for homes and propels prices higher.