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Moody’s: House Prices Will Rise By 8.6% Over Next 3 Years

Posted by: In: Real Estate 08 Nov 2017 Comments: 0 Tags: , , , , , , , , , , ,

3 November 2017 – El Economista

An increase in the proportion of the active young population and the greater affordability of housing will boost house prices in Spain by 8.6% over the next three years, according to forecasts from the ratings agency Moody’s, which has analysed the impact of demographic trends on prices in the residential real estate sectors of seven large European markets.

In the case of Spain, the risk rating agency forecasts a rise in house prices of around 5.6% in 2018, but then limits that increase to 1.4% per annum in each of the following years, until 2020.

“Low interest rates, an improvement in economic conditions and the higher proportion of the active young population will serve to boost the housing market”, says Greg Davies, analyst at Moody’s, adding that in the last decade, the proportion of young workers has increased by 8%.

The agency indicates that the current environment of low interest rates and the economic recovery, which is reducing the still high level of youth unemployment, are contributing to the affordability of housing in Spain, although it says that salary growth is still low, which is preventing some young professionals from buying a home, something that Moody’s expects to improve over the next few years.

In this sense, the agency points out that in 2014, around 14% of full-time workers in Spain earned less than 2/3 of the median income, compared with just 7% in Italy and 9% in France.

On the other hand, Moody’s underlined that Spain has experienced a decline in the demand for new build homes, whereas there has been a lot of activity in the second-hand market. Construction activity in the country currently represents just 40% of the volume recorded in 2007, reflecting, amongst other factors, the sovereign deleveraging, including the banking sector, which has led to a substantial reduction in residential investment.

Original story: El Economista

Translation: Carmel Drake

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