Spanish house prices forecast to climb 6pc

Spanish house prices are forecast to climb 6 per cent in the coming 12 months, as the market continues to recover.

A new report from CBRE predicts that values will rise 5.95 per cent in 2016, as price growth strengthens across the country and optimism spreads.

Madrid, Barcelona, Valencia and the Balearic Islands are highlighted as the areas set for strongest growth, based on their relative strong performances in 2015. In Q3 of last year, according to the INE, Madrid (6.9 per cent), Catalonia (6.1 per cent), Valencia (6.1 per cent) and the Balearics (8.4 per cent) were the most sought-after parts of the country.

The same three months are expected to enjoy the strongest performance in 2016, with the quarter's growth forecast at 6.3 per cent year-on-year.

CBRE also notes a 40 per cent rise in resales and 35 per cent in new home sales, as new-build supply dries up in the most popular hotpots, which they suggest puts 2016 on course for both more investment and more construction. Indeed, in Marid alone, planning approvals rose 63 per cent in the first 10 months of 2015, ahead of national increase of 18 per cent.

Investment has been a key driver in the recovery of the country's real estate in the years since the global financial crisis, with last year, in particular, seeing demand from overseas soar on the back of favourable exchange rates between the pound, dollar and euro. CBRE also attributes the recovery to low interest rates, which have made lending more affordable property more attractive to investors.

Rental investment could also become a growing factor in the market's recovery in the future, as CBRE highlights the growth of the sector among those unable to afford to purchase a home.

"The rental market is expected to continue to expand in 2016 and the ratio of rented housing (14.9 per cent in 2014) will continue to converge towards the Eurozone average," says CBRE.