Spanish housing market is beginning to recover

The housing sector continues to recover gradually. The INE housing price index rose 4.0% q/q in Q2 15, helped by a strong rebound in prices of existing homes, while housing prices increased across all regions. Registered home sales posted the highest print since early 2013, while construction activity is also recovering: investment is rising in both nonresidential and residential sectors (although more in the former) and building permits remained on a modest upward trend. 

Along with macroeconomic conditions, it is believed that easy financial conditions have supported, and should continue to support, the housing market recovery. The 12-month Euribor, the key rate for nearly 95% of Spanish mortgages, has declined to an all-time low, and while total mortgage credit growth is still contracting, new mortgage credit flows to households have been growing since January 2014. In addition, mortgage and construction sector NPL ratios have been on a downward trend since their early 2014 peaks.