19 October 2016 – Expansión
(…). BBVA Research indicated yesterday, in its report entitled “The Real Estate Situation in Spain” for Q2 2016, that “the improvement in sales is permitting a gradual appreciation in house prices”, which are expected to grow by 2.5% this year and by 3.5% next year. It added that this rise will be accompanied by very significant growth in terms of transaction volumes, given that sales are forecast to grow by 10% this year and by 6.5% next year, to reach 475,000 real estate operations in 2017.
This report echoes data published by Spain’s National Institute of Statistics (INE) and the Bank of Spain, as well as by property registrars and several appraisal companies. One of them, Tinsa, recently indicated that house prices rose by 2.4% in September, with a strong increase in rental prices. Nevertheless, BBVA Research went a step further and said that this positive trend will continue well into next year, and may even accelerate thanks to job creation, improved confidence, the opening of the credit tap and demand from overseas buyers.
All of this will reinforce the effect that the price rises seen in recent months have had in terms of encouraging the market and investors who do not want to miss out. In this sense, BBVA Research said that “the path observed in terms of residential property prices is generating positive expectations, which will become a new factor that will support the demand for housing”. As a result, the sector will manage to offset some of the forecast deterioration in other factors next year, such as economic growth (which will slow by almost one percentage point in 2017, according to the main analysts, including BBVA itself), the moderation in global growth and the expected increase in oil prices.
Nevertheless, this increase in prices and transactions is not isolated, but rather is generating even greater positive effects in other aspects of the market. In this way, permits for new homes have recovered at a rate of almost 35% across Spain as a whole and by more than 100% in regions such as the Canary Islands and La Rioja. As a result, 90,000 new permits are expected to be signed next year, with housing starts at record highs compared to recent years.
In addition, the market for land is also enjoying more activity, with a 19.2% increase in the surface area sold during the first half of the year. This increase has also been accompanied by an increase in land prices (5.9%) following an increase of 4.3% in 2015, which reflects the outlook for the sector. Meanwhile, the purchase of land has undergone a significant change in recent years, given that at the start of the crisis, the major investors were individuals and now 70% of buyers are companies, thanks to the return of credit to the market.
Original story: Expansión (by Pablo Cerezal)
Translation: Carmel Drake