Q2 2014 Stats: Property Prices Rebound For the First Time in Six Years

The Repeat-Sales House Price Indice (El Índice de Precio de la Vivienda de Ventas Repetidas in Spanish), based on the Case-Shiller Index and elaborated by the Property Registrars Association in Spain shows an increase of 0.97% in year-or-year terms in the second quarter of 2014. The rise means the first positive development in the past six years, in spite of the fact that sales declined by 5.4% quarter-on-quarter.

In comparison with the previous quarter, housing values creeped up by 1.53% and made it to the third consecutive quarter of uninterrupted turnaround in tendency, the report states. Since the golden times peak, cumulated adjustment post 32%, falling to the 2003 pricing levels.

Existing Homes Lift The Market Up 

If it comes to the sales performance, in the second quarter they declined 5.49% over the first quarter figure. In total, from April to June, there have been 78.464 closed transactions, which is above the depressive number of 72.560 units sold at the end of 2013.

Blame for the slump in operations number should be principally put on the new construction segment which unpretentiously hit the rock bottom level with mere 30.605 houses sold each quarter, representing 39.01% of the total. The number is by 18.89% lower than at the beginning of 2014. On the other hand, the market of existing houses celebrated sealing of 47.859 deals, performing by 5.67% better than a quarter earlier. In regard to subsidized housing, this type of dwelling accounted for only 3.24% of the sales total.

By regions, Andalusia saw the most contracts signed during the said period of time (15.583 transactions), followed by Catalonia (11.980), the Valencian Community (11.591) and the Community of Madrid (10.522).

In this way, the total of sales registered over the past 12 months mark a new record low with 310.864 operations, mainly as a consequence of the poor Q2 2013 performance (149.378 deals). In the first half of 2014, already161.486 home purchases were closed.

Sales to Foreigners Going Through The Roof

The positive perception of the Spanish real estate among foreign investors progressively evokes a terrific demand from their part. In the second quarter of 2014, buyers from outside of Spain accounted for 13.03% of the total home purchases in the country, marking a new quarterly record high. Britons – unsurprisingly – bought most, accounting for 15.77% of all sales to foreigners, followed by the French (10.11%), Russians (8.08%), Germans (7.53%), Belgians (7.26%) and the Swedish (5.93%).

In regard to loans granted to acquire these properties, an average mortgage amounted to €101.553, falling 2.40% over the previous quarter. In 13 Spanish regions, the loan averaged at below €100.000. Thus, the monthly payment of a mortgage post €561.43 in the second quarter of 2014, meaning a 3.76% q-o-q decline. The percentage of the installment to the cost of salary equalled to 29.82% with a 1.15 bps decrease in comparison with the Q1 2014.

Cheaper Financing

Interest rates accelerated their way downwards, sitting at an average of 3.80% for new loans, compared with the 3.97% from the first quarter. Fixed rate contracts represented 4.27% of all signed in the Q2, while the variable rate (basing on Euribor) type started to come back on the right track, finally accounting for 91.54% of the total. The payment terms go stable, showing a slight fall of 0.37% over the previous quarter and fixing at 22 years and 5 months on average (a month less than in the Q1).

On the other side, the Default on Mortgages Report by the same Registrars proves that the number of eviction notices issued due to lack of payment in the second quarter of the ongoing year post 18.921 cases, by 2.39% more than in the first quarter (18.480). Around 64.38% of the warnings corresponded to natural persons, whereas 35.63% to legal persons. Moreover, Spaniards accounted for 88.42% of all delinquent mortgages, while foreigners for 11.58%.

Original article: El Mundo
Translation: AURA REE

Original Story:

Translation/Summary: aura