Murcia is Spain’s seventh largest city and boasts a noted university. However, in recent years even the best qualified new graduates have struggled in the Spanish job market which has had unemployment levels that have even exceeded those of Greece. With so much under employment – especially among the young – there has been a knock-on effect in the country as a whole, and Murcia in particular, with newcomers to the property market. Not only have Murcian banks and mortgage lenders had to deal with many more repossessions than they would like, property prices have fallen as demand has dwindled – hardly surprising given the low levels of job creation.
However, recent economic gauges indicate that the tide may well be turning, both in terms of property prices and unemployment. No less an authority as the International Monetary Fund (IMF) revised its economic forecast for Spain upwards in January. The IMF said that it now predicted a 0.6 per cent growth for Spain in 2014 and gave a new figure of 0.8 per cent for its economic expansion in 2015. This compares favourably with the IMF’s previous prediction, made in October 2013, for a gross domestic product growth level of 0.2 percent for the current year.
Chief among the economic indicators used for this revision is the level of job creation currently underway in Spain and Murcia in particular. Spanish Economy Minister Luis de Guindos said that he thought job creation would be significant in the coming year. He said this would follow the economic upturn that had already been announced for the second half of 2013. Speaking on national radio, de Guindos said that 2014 will see the net creation of jobs and that this would be higher than even the figures the government had previously forecast during September’s budget. He went on to say that in tandem with the job creation he expected, that the jobless rate will diminish – boding well for Spain’s unemployed.
This is especially good news in Murcia, where a boost to the local economy and property market has already been aided by recent growth in the agricultural sector. With more and more Murcians finding jobs in that sector, so the property market has shown distinct signs of a domestic-led recovery. Murcia’s property market has for a number of years been on the floor with many foreign investors getting out or choosing to hold on, waiting for the recovery that now appears to be a reality.
Guindos has been keen to stress that the economic recovery he has brought about would take firm root and not be a flash-in-the-pan. This, he claimed, is in no small part down to a government tax reform which reverses a personal income tax rise that was implemented by the government when it came to power in 2011. There has also been a similar cut in corporation taxation. All of these factors have led to the emergence of something that has been sorely lacking in the Spanish property market since the advent of the global financial crisis – confidence.
Of course, recovery in confidence is going to be patchy in a country as large as Spain and there are certain regions which are undoubtedly going to have to wait longer than others to see the fruit of economic recovery. Murcia appears to be in the forefront of the changes that are now taking effect in the country. This can be seen in the property market, particularly when you look at the top end of the sector, including villas and luxury apartments. When you consider Murcia’s attractive coastline, pleasant climate and good airport infrastructure, there can be little escaping the fact that property prices have been propped up by overseas investors for the last few years. However, with the local economy starting to thrive, so domestic interest in the property market can only grow. And that is music to the ears of many investors who eye the region as one with the greatest potential.