According to the Bank of Spain, house prices in the country are still about 15% below their peak value recorded 18 years ago. This means that the market has not yet reached dangerous overheating. Moreover, the key difference between today's situation and the pre-crisis one is the reasons for the price increase.
The regulator explained that the current growth is primarily due to high demand and an acute shortage of supply in the market, rather than risky lending by banks. An indirect confirmation of this is the much stricter conditions for issuing mortgages. For example, now the average mortgage loan covers just over 80% of the purchase price, whereas in the years before the collapse of 2008, this figure reached almost 110% (loans were issued for an amount exceeding the price of housing).
The report also notes that the total amount of household mortgage debt remains "restrained from a historical point of view" and significantly below the levels observed between 2000 and 2008. At the end of last year, mortgage balances increased by 3.7%, which, according to the central bank, is a steady but not threatening increase.
Thus, the central bank's main conclusion is that Spain's housing market is much healthier today than it was 18 years ago. And although the shortage of new homes continues to push prices up, there is no reason to talk about a new "bubble."
Source: The Olive Press
