Six Indicators in Favour of Recovery of the Spanish RE Market

16/07/2014 – Expansion

Below, we list the six indicators proving rise in sales, stabilization of prices and growth in construction. Also, tendency on the market becomes more and more clear: first the demand goes up, then the price slump slows down and finally, the supply starts to increase.

However, experts call for cautiousness and remark the process will progress at a snail´s pace due to economical and labour instability still haunting the country.

Indicator 1: Pretty Optimistic Figures Published by the National Institute of Statistics (INE): Housing sales climb a 5.4% YOY in May

Purchase of homes jumped up by 5.4% in May (compared to the same month in 2013) and it was the third consecutive month of upwards inclination (in March it grew by 22% and in April by 5%) after ten months of an abrupt drop-off. The improvement should be mostly assigned to resales.

Namely, 28.124 transactions took place in May. 90% of the units were free and 10% subsidized. New homes made 38.7% of the total, whereas 61.3% corresponded to the exisiting stock.

In opinion of Beatriz Toribio leading the Research department at Fotocasa.es, the data confirms that “the market went stable and regains the pulse“.

The May year-on-year rebound was felt in all Spanish regions except for Castille-La Mancha (–15.2%), Galicia (–6.0%) and Madrid (–5.5%). The biggest jumps marked the Balearic Islands (+33.1%), Navarre (+32.9%) and Cantabria (+30.4%).

Indicator 2: The Ministry of Public Works: 48.4% More Houses Purchased in Q1

The latest information concerning sales and published by the authority shows a robust upsurge in sales (+48.4%, 81.358 transactions) in the first quarter of the year juxtaposed with Q1 2013. However, one must remember that the Q4 2012 and the Q1 2013 were exceptions due to cancellation of the property purchase relief and rise in VAT.

Indicator 3: Foreign Investors Buy by 27.2% More in Q1

The interest of foreign purchasers in the Spanish property market shot up over the past years. Specifically, they acquired by 27.2% more homes than in Q1 2013 and in total accounted for 19.4% of all sales.

When it comes to nationalities, the British led with (13.8%), followed by the French (10.5%), Russians (8.4%), Germans (7.5%) and Belgians (6.9%).

Indicator 4: The Second Major Growth in Construction in Eurozone

Another datum provided by Eurostat referes to new construction in Spain which advanced by 4.8% in April and thereby linked 6 months of uninterrupted way up. This was the second best score both in the European Union and in the euro-zone (average of 0.8% monthly).

The highest monthly increases were registered in Slovenia (+6.7%), Spain (+4.8%) and Portugal (+4.5%), while the sharpest declines were seen in Poland (-5.4%), Romania (-4.7%) and Slovakia (-2%).

In comparison to the previous year, Spain leads in the ranking with a 53.4% appreciation, then goes Slovenia (+48.8%), Hungary (+27.2%) and Poland (+13.3%). On the other side there position: Portugal (-9%), Romania (-6.8%), Slovakia (-5.1%) and Italy (-5%).

Indicator 5: Tinsa: Slump in Prices Screeches to 3% in June

Housing values continued to slow down over the month of June until stopping at 3% YOY (in May it showed 4%).

Specifically, Tinsa-designed IMIE General indicator says the correction post 39.7% since the 2007 peak and settled at 1.378 bps (August 2003 level). The agency claims the fall will halt near to zero at the end of the year.

Indicator 6: Sociedad de Tasación: Houses Cheapen by 2.3% in Q2

New and existing home prices averaged at 1.328 Euros per square meter in the second quarter of 2014, meaning a 2.3% depreciation in regard to Q2 2013. Although the values keep sliding down YOY, they do it in a much smoother manner.

Moreover, compared with the first quarter of 2014, dwellings got more expensive by 4.5%.

Beatriz Toribio, head of Research department at Fotocasa.es claims it is too soon to portend any change in tendency or the end of adjustment. For her, lending and job market improvement are the key. “Banks do not relax lending and as we have seen, the new mortgage approvals went back again in April. This happens because large majority of the buyers are foreigners or small-medium size investors with equity”. “Without financing, the property market won´t recover”, she concludes.

Manuel Gandarias says “these are good news but we should watch the future sales performace which will firmly prove the stabilization and sustainable growth”.

Original article: Expansión (by B. Amigot)

Translation: AURA REE

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