Spanish Housing Forecasts

2. Taking today’s prices, which are the expectations for house prices and why?

With the considerations below, including the poor Euro Zone and Spain growth forecasts, housing oversupply againstthe very poor demand, and the very direct relation between the private housing market with the financial sector (banks as money lenders and house sellers), we expect a very long recovery for Spain,especially in housing.
We expect 2013 house prices to fall by between 8% and 11% and 2014 to stabilize by around 0%.

i. World growth is estimated in 2.39% in 2013 and 3.13% in 2014, according toeconomists’ forecasts, pushed by emerging markets and China.

ii. Europe is still in difficulties. Economy’s high uncertain, while waiting the monetary and fiscal policies to be evidenced inprivate and financial sectors. Symptoms of recession still are evidenced in macroeconomic forecasts in the market. Still concerns about Greece. However, growth is expected to gradually gain momentumduring the course of 2013. Initially, an improving external environment and enhanced competitiveness are projected to support exports. Recovery is also likely to be supported by the favorable impact ofthe very low level of short-term interest rates on private demand and by the effects on real disposable income of the assumed decline in energy and food price inflation.

EU Macroeconomic Forecastsx
iii. In Spain, private sector has started to find new opportunities in external markets through competitiveness (current balance reduced from -3.53% to around -2.00%). Government and CentralBank have started to adjust economic policies to have an economic stimulation. Monetary policy in ECB coming down from 2.50% in 2008 to 1% in 2011 and to 0.63% projected by 2013. Spanish fiscal deficitreduction from -11.20% in 2009 to around -8.00% in 2012). Nevertheless, economic agents think that Spain will keep its recession conditions by 2013, arguing that these strategies will be shown in...