Spanish home mortgage approvals rose in March for the first time in almost four years, adding to signs that the property market is stabilizing six years after triggering the worst recession in the country’s democratic history.
The number of residential loan approvals rose 2 percent from a year earlier, the first increase since April 2010, the Madrid-based National Statistics Institute said today. The total amount lent rose by 16 percent, its first gain since 2007. House prices in the country fell 3.5 percent from a year ago in the first quarter, the smallest decline in over three years, separate data from the Public Works Ministry showed.
As a recovery in the fourth-largest economy in the euro area extends and its record unemployment subsides, the property market whose downfall locked the country into a six-year economic slump is showing signs of life. While home-price data isn’t yet signaling a turnaround, improvements in sales and lending indicate that values may be starting to stabilize.
“Everything indicates that mortgage approvals will evolve positively this year,” said Fernando Encinar, co-founder of Spain’s largest property website Idealista, in an e-mailed comment. “Banks are showing more and more interest in granting more loans for home purchases.”
Spain’s General Council of Notaries said earlier this month that home sales jumped more than 45 percent in the first quarter from a year earlier.
End of Decline
Spanish real-estate prices may be close to reaching the end of declines, International Monetary Fund senior economist Paulo Medas said during a news conference in Madrid yesterday. “All signs point to the end of the downward adjustment.”
The nation’s economy expanded twice as fast as the euro region average in the first quarter as households start spending again after the toughest austerity measures in over three decades. Retail sales rose 0.7 percent in April from a year ago, INE said today in a separate release. That’s the fourth increase in eight months following more than three years of straight declines.
“The real estate crash is on the verge of bottoming out,” said Raj Badiani, an economist at IHS Global Insight in London. “House prices are increasingly likely to rise in 2015.”