Wednesday, 15th July 2020

This Month's Magazine
Property News

Property News

Various news items of interest about the property industry

House prices are expected to increase by a moderate 9% in 2005.
According to the Caixa de Catalu├▒a, it is anticipated that house prices will continue to increase in the next two years, although this will be a much more moderate progression than we have seen recently. Their research department expects that prices this year will average an increase of 15.1%, whereas the increase next year is expected to average just about 9%.
The statement is based on the financial strength of Spanish families, who are sensible borrowers, with only an average of 25% mortgage on their homes. The recent price increases has created a wealth which is only marginally used in further borrowings.

The Banco de Espa├▒a
announces that for the first time in two years the demand for mortgages by Spanish families has dropped in the third quarter of this year. This is the opposite to what is happening in the rest of Europe. Apparently this fact does not correspond with the amount of financing received by families to buy a home, the latter having in fact increased; up by 23.6% in July to be exact. 
Although the mortgage applications level is still high, this is a definite sign of weakening. According to the report, "a substantial drop in housing demand" is also expected in the third quarter.


Of course there is to be taken into account that the lending conditions being applied now are much stricter.
The Banco de Espa├▒a furthermore comments that Spain and Germany are the only exceptions in Europe; all other countries have improved lending conditions to an expected improved economy.
On the other hand, Jos├ę Luis Malo de Molina, the research director of the Banco de Espa├▒a, states that mortgage lending is also affected by the fact that the overpricing of properties are over priced by some 20%. The adjustment of prices, since the last recession in the 90's, has exceeded the acceptable norm and widened the gap between market price and real value. Therefore it is expected that prices will gradually adjust systematically until reaching a point much nearer to a realistic market value and in keeping with the correct rate of inflation, without incurring a sudden "bubble burst" as predicted by some.

Slowing down of house price increases.
According to Fernando M├ęndez. the president of the Property Register, the rate at which housing prices have escalated in recent times is now slowing down, registering a reduction in growth of about 2% during the third quarter of this year.

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