Spanish property will not be saved by the country’s labour reforms, according to one expert. Writing in The Guardian, Bob Hancké, reader in European Political Economy at the London School of Economics, claimed that despite alternative reports, figures show the recovery is far from close. Unemployment has been cited as the main reason behind the inability of the Spanish real estate sector to reverse the downward house price spiral. Despite prime minister Mariano Rajoy claiming his labour reforms are working, change isn’t happening fast.
This can be seen in Spain’s current unemployment rate, Mr Hancké claims, which stands at 26 per cent and looks unlikely to improve in the immediate future. The economic position of the country isn’t improving significantly either. “The current account deficit is falling, less as a result of increased exports and more because imports fell dramatically as domestic demand collapsed in the wake of the housing and financial crisis,” Mr Hancké wrote.
The academic added that it is “naive” to believe market reforms will lead to falling unemployment and economic growth. This is because economic growth must outpace productivity growth for this to occur and this is currently not happening in Spain.
So is it all doom and gloom for the property market? No, not entirely. Foreign buyers are still attracted to the country and there are areas where supply cannot meet demand, which is certainly something to marvel at in an overly saturated market. Spanish Hot Properties claim this is particularly clear in the luxury housing sector and there isn’t currently enough stock to go around.
Nick Stuart, director of estate agent Spanish Hot Properties, explained that investors are flocking to popular areas like Marbella and want to access the best real estate on the market. However, the number of top quality modern villas or frontline beach apartments is too low and buyers are no longer attracted to the Andaluccian-style finca.