“Goldman Sachs Group Inc. (GS) traders are telling investors Spain’s housing market is improving, even as unemployment is at a record 26 percent and 2 million homes linger unsold after a decade-long building boom crashed.
A Goldman Sachs trading desk is recommending Spanish residential mortgage securities that are priced cheaper than other assets linked to the country and may be attractive to comparable European bonds, according to a presentation seen by Bloomberg News. While official statistics are lagging behind, homes are selling in regions with the most inventory and housing starts are dropping, the bank said.
Spain is mired in its second recession in three years and Prime Minister Mariano Rajoy is imposing the deepest budget cuts in the country’s democratic history to avoid an international bailout. While that’s restored some investor confidence, the number of jobless is near 6 million and home prices that more than doubled in the decade through 2007 before turning negative in the first quarter of 2008 have fallen by about 26 percent.
“We have significant concerns over the increasing unemployment levels in Spain, particularly in a falling housing market,” said Dipesh Mehta, a London-based securitization analyst at Barclays Plc, without referring to the Goldman Sachs report. “On both counts we do not expect the situation to improve anytime soon.”
About 40,000 homes have been foreclosed on in Spain since the collapse of the market five years ago. Overbuilding created ghost towns of unoccupied homes around the country, and the Ministry of Public Works estimated last year there were 700,000 unsold homes. With unfinished units and foreclosures, the total stands at 2 million, according to Madrid-based real estate consulting firm Acuna & Asociados.
