The Latest Spanish Property News from Kyero.com
July 11th, 2007
The president of the Spanish Mortgage Association (AHE) confirms that property prices will stop rising little by little, in step with inflation.
Industry professionals agree that property in Spain is overvalued and that prices are due to drop soon. The drop, however, won’t be sudden and pronounced; sources predict a gradual lowering instead. Gregorio Mayayo, president of the AHE, is convinced that Spain is not facing a crisis in the real estate sector.
Mayayo believes that Spain will avoid a traumatic property devaluation - such as that experienced by the UK and US - thanks to a large group of expectant buyers held off by insufficient supply. He also adds that the rental market in Spain is practically non-existent, and that anyone who sells is forced to buy another home even if it’s of lesser value.
A massive increase in the number of homes on the market is unlikely, especially considering the possibility of lower prices, since this would provoke long lines of buyers and prices would rise immediately unless such an event coincided with a sudden economic halt, increased unemployment and rising interest rates.
Mayayo doesn’t believe Spain faces such a situation and points out that current market conditions differ greatly from those of the real estate crisis of the early 90’s. Today, construction companies are much stronger and can handle waiting up to a year for properties to be sold.
The main factors of the yet-to-be-halted rising property rates have been the arrival of large numbers of immigrants, the addition of women to the workplace and an increased presence of young buyers in the market.
Regarding the significant number of properties purchased by non-Spaniards, Mayayo points out that foreign homeowners in Spain make mortgage payments as well or better than Spaniards. He also emphasised the crucial role of young buyers, who’ve cleared the market of a class of homes that would otherwise have been nearly impossible to sell, greatly facilitating sales of remaining properties.
Story from 999today.com
