BBVA Research: RE Sector Makes “Good Start” To 2017

6 June 2017 – El Mundo

BBVA Research has given the real estate sector a “good mark” for the first quarter of 2017, following a “positive” trend in terms of sales, which accelerated the growth in prices. However, the organisation indicated that the sector showed signs of a “significant heterogeneity” by region once again, and that there was a loss of “momentum” in terms of new loans in April due to a decrease in refinancings.

That was according to the latest Real Estate Observatory for Spain report, prepared by BBVA Research, the financial entity’s research service, which acknowledges a “positive trend” in terms of house sales, given that, based on data from the Centre for Statistical Information from Notaries (CIEN), 48,695 homes were sold during the month of March.

This means, after correcting the series for seasonal variations and calendar effects (CVEC), there was a stagnation in sales with respect to the previous month, but an increase in sales (19.5%) in YoY terms. In this way, sales during the 3 months to March rose by 16.2% YoY, above the average for 2016, in large part thanks to the fact that the main determinants of demand “continued their positive tone during the first quarter of the year”, said BBVA Research.

In this sense, it highlighted that employment is continuing to evolve positively, given that the number of people registered for Social Security in April and May grew at an average MoM rate of 0.4%, above the average monthly rate recorded during the first quarter (+0.3%) (…).

Fewer new loans

Nevertheless, the report warns that new loan operations to buy a home stagnated in April, due to a sharp decline in the number of refinancings. According to data from the Bank of Spain, during the fourth month of 2017, new loans to buy a home decreased by 41.6% YoY, a reduction that actually reflects the high volume of refinancings that took place in April 2016. As such, if we exclude refinancings, the number of new loan operations remained stable with respect to the same month last year (-0.1%).

BBVA Research is “certain” that the stagnation is related to the fact that Easter fell in April this year. In fact, the sum of new operations in March and April rose by 13.1% YoY. With this, during the first four months of the year, new loans to buy a home rose by 10.6%, with respect to the same period a year earlier. Excluding refinancings, which decreased by 86% during the same period, the increase in new mortgage loans amounted to 16.5%. (…).

Heterogeneity in terms of price rises

Meanwhile, the growth in house prices accelerated during the first quarter of 2017. According to the Ministry of Development, the average house price amounted to €1,525.80/m2 during the first quarter, up by 0.7% in QoQ terms, after correcting for seasonality (CVEC), in other words, 0.2 percentage points higher than during the fourth quarter of 2016. Moreover, the YoY evolution saw an acceleration in the growth rate to 2.2% during Q1, up by 0.7 percentage points compared to the previous quarter.

In any case, BBVA Research indicates that the evolution of house prices was still “significantly heterogeneous by region” between January and March. After correcting the series for seasonality, price rises were reported in nine autonomous regions (Andalucía, Canarias, Cantabria, Cataluña, Comunidad Valenciana, Madrid, Murcia, Navarra and País Vasco), with particularly noteworthy rises in Cantabria, Navarra and País Vasco – the three regions have shown less activity in previous quarters.

By contrast, average house prices fell during the first quarter with respect to the previous quarter in all of the other autonomous regions, led by Aragón and La Rioja, which saw QoQ decreases of around -2%. (…)….whilst the price increases being recorded in the Balearic Islands, Madrid and Cataluña exceeded 10% in all three cases.

Housing permits on the rise again

Finally, the first quarter of 2017 closed with a renewed growth in construction activity. (…). The number of housing permits rose by 18.7% during Q1 2017. In this way, almost 20,000 new homes were approved during the first three months, up by 3,141 compared to the same quarter in 2016. (…) .

Original story: El Mundo

Translation: Carmel Drake

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