A poster of a house for sale, on October 28, 2010 on a balcony in Madrid
The Spanish property market, hit by the explosion of a bubble in 2008, recovered the volume of pre-crisis transactions in 2017, although prices are still lower than a decade ago, according to official figures published on Monday.
Nearly 465,000 property sales transactions were registered in 2017, “the highest annual figure since 2008,” the Property Registry said in its report. Compared to 2016, the increase last year was close to 15%.
The Spanish real estate boom initiated in the late 1990s caused an increase in prices disconnected from the real market value.
The bubble burst in 2008, under a global financial crisis that caused a slowdown in the Spanish economy, preventing many borrowers from repaying their loans.
The prices, which sank until they returned to the upward trend in 2014, had a net advance in 2017, of 7.6% on average for the whole of the country with respect to the previous year.
In any case, they are still 21% lower than the level reached in 2007, at the height of the real estate bubble, the registry said.
The real estate recovery is driven by the strong growth of the Spanish economy, which reached 3.1% in 2017, its third consecutive year above 3%.
“The low interest rates together with the decline in the unemployment rate (which is still high) (…) facilitate access to the properties,” Moody’s said in a report published on Monday.
“Although sales are expected to surpass 500,000 properties in 2018 for the first time in a decade, it is a figure very far from one million sales before 2007,” Moody’s said. Construction, although reactivated, “is at 40% of pre-crisis levels in 2007,” the agency added.
According to the registry, about 13% of real estate purchases in 2017 were made by foreigners, with the British and French at the head, a figure that has remained stable for four years.
In some regions with very popular coast, the proportion is more pronounced, as in the Balearic Islands (35%), the Canary Islands (29%) or the Valencian Community (27%).