Price increases until 2025 expected for Spanish homes, say experts

The current upturn in Spanish property prices is expected to last until at least 2025, forecasts José Luis Suárez, professor of financial management at the IESE business school…

By examining the past property price trends, Suárez believes that home values in Spain will continue to rise for almost a decade, mirroring the same curve that characterised property prices after the turn of the millennium before the 2008 peak and subsequent crash.

The professor’s calculations suggest that homes will be worth 40% more in 2025 than their current values, which – if correct – would underline Spain’s claim as a leading investment location for property buyers.

This increase will in turn boost demand for housing in Spain, the professor believes, with the country set to build approximately 100,000 new homes a year between now and 2020, rising to 140,000 in the five years between 2020 and 2025.

Suárez was presenting at a property symposium over the weekend, and told the audience that Spain’s housing sector had just cause for optimism given recent trends. Home values have risen by an average of 6.3% in the first quarter of 2016, which is the highest increase for eight years.

These rises come on the back of 24 months of steady recovery, which has in turn boosted the number of transactions and eased lending criteria among banks. This ‘perfect property storm’ is less volatile than last time, too, with investors more sensible in their assessment and expectation of the market, and not demanding or expecting quick and profitable returns.

New house build figures are another important measure of the market, and Suárez’s projections are reasons to be cheerful. In 2015, the new-build sector bottomed out at just 50,000 new homes, down from 2006’s peak of 800,000 – a figure that even at the time felt unsustainable.