House prices expected to rise by 3% in 2007
According to a study by Asprima, the Association of Madrid Property Developers property prices will rise by 3% 2007 followed by stagnation in prices in 2008 and then a rise of 1% in 2009.
In a report presented on the first day of a Real Estate conference in Madrid Asprima foresees a drop in demand for properties of around 15 – 20% which will lead to a situation similar to the UK, Australia and the US where the housing market went through a boom but has recently remained stagnant partly due to the rise in the cost of borrowing.
Moreover, the report states that the Spanish housing market is a turning point and is moving towards a less favourable situation. However, it also confirmed that once prices have adjusted realistically demand will rise once again.
The president of Asprima, José Manuel Galindo, suggested that the Spanish property market is undergoing a process of normalization with prices rising less and less production.
He blamed the recent rises in interest rates. Despite this he still considers that the demand for housing will remain high over the following 6 or 7 years.
Furthermore also José Manuel Galindo referred to the 4 million immigrants who have already moved to Spain which could result in a demand for more than 100,000 new properties per year.