International credit ratings agency Moody’s has predicted Spanish property prices will increase by 8.6% driven by low interest rates, improved economic conditions and a rising proportion of younger workers.
Based on research into the effect of demographic tendencies on property prices in seven of Europe’s largest cities, the credit ratings agency forecasts Spanish property prices to grow 5.6% next year followed by 1.4% annual growth the following two years.
According to Moody’s Spanish property is becoming more affordable thanks to current low interest rates combined with an economic recovery and reduced youth unemployment. They do point out that whilst some young professionals might holding off from entering the property market due to low salary growth, this is expected to change over the coming years.
The agency also points out the fall in demand for new build property in Spain with the resale market currently witnessing far higher levels of activity, going on to point out that activity in the construction sector is currently at 40% of the levels seen during the 2007 market peak. However, with the level of applications for new build licences on the increase in more popular areas such as Málaga and the Costa del Sol, this is also likely to change in the next few years.