Spains best week signals property recovery15/08/2012
It’s been another good week out of the 200 bad weeks of the recessional mayhem as events combined to lift the spirits, optimism and spending power of the nation
First their footballers’ virtuoso victory at Euro 2012 had the populace dancing in the streets and thinking there was, after all, a better life to follow record job losses and cash shortages.
Then the latest Consumer Confidence Indicator (CCI) prepared by the Centre for Sociological Research (CIS), showed the percentage of Spanish people who are planning to buy a home in the next year, has risen more than one point from May.
Finally, the European Central Bank reduced the interest base rate by 0.25%, saving the average Spanish family more than EUR 700 in annual mortgage repayments. Last year, the ECB approved two rate increases – in April and in July – and two reductions – in November and December – to fix the rate at 1%, before this week’s cut brought it down to 0.75%. In April 2011 it was 1.75%.
Because the domestic property market was so weak, the Spanish Government has been encouraging international buyers to snap-up the 1,000s of bank-owned and key ready bargains, with incentives like 50% cuts in VAT and Capital Gains Tax. Now ministers are hoping the increased confidence and interest rate cut will result in more purchases from Spanish nationals.
Boosted by Spain’s EUR 100 million loan success at the Eurozone summit, Spanish Prime Minister, Mariano Rajoy told a conference of his ruling PP Party that Spain will now “step on the accelerator” as he announced new and ambitious structural reforms which will be “a milestone in the modernisation of our country”.
High on the agenda is the stuttering property sector, for a booming decade the main economic driver and currently bouncing along the bottom awaiting confidence boosters.
Peak to present property prices are down by an average of 44%, interest rate is at its recessional low point, banks are offering generous mortgages to clear their books of unwanted villas and apartments, and the Spanish Government has provided big tax breaks. Pundits expect an increased demand from the domestic and international property buyers and that could be the start of a full-on property recovery.
“The market could be well on the way to recovery within a year after a few more stutters this summer. Investors already realise the prices in Spain are at bargain levels and even lower mortgages could provide the equivalent of at least an extra month’s rental income and boost the yield
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