BBVA: Housing Market Makes A Strong Start To 2017
10 May 2017 – Europa Press
BBVA’s latest report highlights the “positive” evolution of the real estate market at the beginning of 2017, given that house purchases are still being “backed” by mortgage financing, construction is continuing to grow and house sales are maintaining their upwards trend.
At least that is according to the “Real Estate Observatory of Spain”, compiled by BBVA Research, the financial entity’s research service and BBVA’s Real Estate area, which states that the recent review of the macroeconomic scenario by BBVA, which forecasts GDP growth of 3% this year, introduces “an upwards bias into the forecasts for 2017”.
In this sense, the entity highlights that house sales maintained their growth rate, supported by the “strong performance” in terms of employment and mortgage loans, whilst construction activity also “remained dynamic”.
According to data from the General Council of Notaries, during the first two months of 2017, 72,371 homes were sold, up by 13.9% compared to a year ago, but in line with the average for 2016 as a whole.
Amongst the factors that BBVA points to as reasons for the improvement in the real estate sector, are the labour market in Spain, which “has continued to improve”, as reflected by Social Security sign-on data, such as the Active Population Survey (EPA). According to the EPA, the number of people in employment grew by 0.6% during the first quarter of the year.
In addition, credit conditions remain “favourable” for households. Interest rates are at minimum levels: the mortgage rate for new operations remains at around 2.2%; meanwhile, the 12-month Euribor rate hit a new minimum in April, closing at -0.119%.
The mortgage market supports residential demand
Moreover, the mortgage market is continuing to drive residential demand. New loans to buy a home rose by 23.5% YoY during the first quarter, excluding refinancings, according to data from the Bank of Spain.
In turn, during the first two months of 2017, almost 12,800 housing permits were granted (20.3% YoY).
Finally, BBVA highlights that the dynamics in the market for land “are still positive”, given that during the first two months of the year, the number of transactions involving land rose by 12.8% YoY, which represents an increase in the traded surface area of 8.8% in one year.
Original story: Europa Press
Translation: Carmel Drake