Spanish property prices on the up for first time in three years

Official data released on Monday by Spain’s National Statistics Institute showed that Spanish property prices were up for the third quarter of 2013 – the months between July and September – for the first time in three years.

Since the country’s recession and subsequent housing slump post-2008, property prices in Spain have generally been going in one direction – downwards. These latest figures show that not only has the country’s economy and real estate industry stabilised, but the signs are good that the first shoots of recovery and growth are starting to emerge…

The data showed that average property prices for Spain in the third quarter grew by a modest 0.7 per cent, having almost bottomed out in late 2012 and fallen a little further over the following eight months. Since mid-2007, however, prices have fallen by an average of 37 per cent nationwide, and in some places by as much as 60 per cent. But for 2013, the annual price fall is just 7.9 per cent year-on-year, with the third and (probably) final quarters enjoying an upturn in prices, particularly in the more robust market of the Costa del Sol.

During the same quarter, Spain’s economy also grew – a sharp indication of just how interlinked the country’s property and construction sector is with its wider financial wellbeing. General reforms in labour, harsh austerity measures, an intelligent focus on Spain’s export sector and the creation of a ‘Bad Bank’ to help ease the toxic loans that were bedevilling the country’s real estate sector all appear to have had the desired effect – to get Spain back on its feet.

The medicine has not been without its side-effects, of course. With the ratio of soured loans to borrowing reaching record highs of 12.7 per cent in September, Spain’s lenders have dramatically cut back on lending: during the height of the country’s property boom years, nearly 6,000 mortgages a day were being issued. Today, that figure is closer to the 800 mark.

Still, that is 800 mortgages more than many naysayers or so-called ‘experts’ predicted during the real depths of the recession in 2008 and 2009. Recovery has been slow and slightly sickly, but the Spanish patient is more resilient, adaptable and hard working than many would have given it credit for.