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Spanish house prices will rise until 2025

A market analyst has predicted that Spanish property prices will see steady year-on-year increases for another 9 years when it will once again reach pre-crisis levels.

Professor of financial management at the IESE Business School, José Luis Suárez presented his findings at a symposium last weekend, adding that it will be necessary to build up to 100,000 new homes in Spain every year between now and 2020, and that annual demand will then increase to approximately 140,000 in the following five years.

Between 2007 and 2014, average levels of construction plummeted to only 75,000 per year, a significant drop from almost 800,000 in 2006. Construction activity across Spain finally bottomed out in 2015 with 50,000 building approvals, and Sr Suárez believes the figure is now set to recover, backed also by mounting new statistical evidence from government notaries seeing a rise in building approvals and construction across Spain.

With regards to prices of residential property, Sr Suárez reflected on the sharp annual increases registered in 2003 (up to 19%) that were followed by equally significant decreases after the property bubble burst in 2007, falling in seven years from 2,062 euros per square metre to approximately 1,400 euros in 2014. Sr Suárez estimates, in light of recent market trends, that the previous high in price levels will be reached in 2025, meaning a rise in property value by up to 40% over the next 9 years.

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