The following excerpt was taken from a recent news article from the Global Edge website. After years of doom and gloom, the mainstream media seized on two reports this week which could indicate the negative news on the Spanish market has been (slightly) overdone.
Spanish exports have increased by 19pc since 2008 and the current account deficit is positive for the first time in fourteen years thanks to falling labour costs will S&P predict will soon encourage firms to start hiring again. According to Fotocasa.es and IESE Business School property prices were stable in January, the first non-decline in three years. Prices even rose in Murcia (+1pc), The Canaries (+0.7pc), Andalucia (+0.7pc). This led Bloomberg, Yahoo and AOL to speculate as to whether this might signal the bottom of the market. Comment Although it’s good to see some positive press attention for the Spanish property market, it is far too early to call the bottom of the cycle. Fotocasa are reporting asking prices which are far less meaningful than actual sale prices. It is also notoriously difficult to draw conclusions from one month’s figures. They may reflect buyers pushing forward purchases to avoid the upcoming VAT rise and u-turn on the tax rebate. Perhaps more importantly, we have yet to see the effect of the so-called Spanish “bad bank” releasing properties onto the market. This kind of supply shock could see a sharp drop in prices in certain areas. The only true way to tell whether a market has turned is after it’s actually happened, as sales begin responding to lower prices and better mortgage conditions. However, prices according to Hugo Navarro, a money manager at BPA Global Funds in Madrid are “still about 20 to 25 percent below these levels”. It could still be some time before a few surprise positive news stories turn into reality. Source: Global edge