Housing Market Rises in 2017

Interviews a panel of real estate experts / Analysts expect house prices to rise by around 5% on average in 2017, but that figure is likely to be even higher in the large cities. Moreover, sales will grow at a higher rate than prices, even though the comparison will be performed against 2016, when around 400,000 transaction were completed.

The property sector started to reverse its negative trend in 2014; it really emerged from the darkness in 2015; and the improvement started to be felt across the country in 2016, albeit in the shadow of the political paralysis. For this reason, and with the macroeconomic improvement to boot, 2017 is set to be the year in which the real estate recovery finally takes hold. The consensus of the experts consulted by Expansión is that house prices will rise moderately, by around 5% during 2017; sales will increase by even more – around 10%; and mortgage lending will flow a lot better than last year. All of this provided that interest rates do not rise.

The reasons for this realistic optimism are primarily macroeconomic. The increase in employment (above all), the growth in GDP, the improvement in consumer confidence – a more important indicator for the real estate sector than many people think – and the gradual opening of the mortgage tap are juxtaposed in a virtuous way for property, which will not only become attractive again for those looking to reposition themselves on the property ladder, but which has also become a major focus of returns for investors. At the same time, there is still some uncertainty hanging over this recovery. For example, the scarcity in terms of the demand for new households.

In this context of a “slow, moderate but constant recovery”, as defined by Beatriz Toribio, Head of Research at Fotocasa, house prices will definitely rise, but not very significantly, according to all of the experts that have responded to our survey.

For example, Aguirre Newman estimates “price growth of around 6% for new and second-hand homes”, according to Juan Riestra, Director of the Residential Division at the real estate consultancy. Maurice Kelly, Director of the Residential area at JLL, thinks that established areas, such as the centres of major cities and exclusive locations along the coast will see “increases of more than 6%”.

Almost all of the forecasts indicate price rises of around 5% and highlight the disparity between the different real estate markets around the country.

José Luis Ruiz Bartolomé, Managing Partner at the consultancy Chamberí AM, notes that “prices will rise by around 5%…” but adds a new and different perspective: “These price rises will not be driven by the central districts of Madrid and Barcelona (like until now), but rather by the more peripheral regions and other cities that have not been performing particularly well so far”.