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March 2, 2016

Factors that stimulate investment in the residential property sector in Spain

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Factors that stimulate investment in the residential property sector in Spain

Residential real estate in Spain continue to attract foreign investors, as this sector of the Spanish economy remains stable compared to the situation in the markets and to the reduced performance of government bonds. The gradual stabilization of the property market in Spain has been possible thanks to favorable economic data, such as prices and sales, the resumption of construction, the issuance of mortgage loans and increase the country's GDP.

The recovery of the housing sector in Spain has been possible thanks to the positive macroeconomic trends and data of industrial development. Despite political instability, experts from the Spanish real estate market say it will not affect the major macro economic indicators of the country, however, "you can reduce demand by potential investors in the short term, but allow to have buildings for sale in Spain and other properties at more attractive prices."

In addition, as important factors for demand for apartments and houses in Spain, as employment and GDP growth,  issuance of new mortgage loans, are developing in the right direction, suggesting favorable outlooks for an increase investment in residential real estate in Spain.

For example, the Spanish GDP grew by 3.2% year on year, becoming one of the highest growth rates among European economies, while salaries also began to rise after being frozen for a few years, by 0.75% in 2015 year, and the forecasts point to a growth of 1% during  2016.

The issuance of mortgage loans, the other important factor to meet the demand for buying and selling residential real estate in Spain, continues to show growth of 33.3% year on year, which favors the increase in sales of houses and apartments in Spain. During the third quarter of 2015, a growth was by 16%, or 93,500 mortgages issued, its best result in this period since 2009. Meanwhile, quarterly growth was by 6.4%.

Construction of the new properties in Spain also began to recover from January to November 2015, having fallen by 95% since 2007, which is confirmed by the data on the licensing of new building, whose number increased by 35 %. This trend confirms that the housing stock in Spain is almost exhausted in key areas of the country.

The price of real estate in Spain also increased last year, contributing to the fact that investors are showing greater interest in them thanks to greater performance that can not guarantee other assets, stocks or bonds. The price of housing has increased by 6.6% in 2015, according to the Association of Property Registrars in Spain.

"All indicators are favorable, so the risk-return ratio makes the Spanish residential property market very attractive for investment," – conclude the experts.

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