Houses in Certain Areas to Go Up in Price in Short Term

24/06/2014 – 20 Minutos

More than one report indicates that the housing prices will hit the bottom this year and start to rise in 2015. As per Alfa Inmobiliaria, in particular areas some dwellings will get more expensive in short term.

The real estate agencies network justifies the statement with the following arguments:

1. Rental Yields

There are areas where values of the cheapest dwellings reach €60.000, while the minimum leasing price posts 450 €/month, giving a gross return of 9% in, for example, San Sebastian de los Reyes.

2. Purchasing Power

There are also areas where housing prices fell by 65%. Units previously sold for €240.000 now stand at €85.000 in, for instance, Arganda. In spite of cut in salaries, the purchasing power of people increased in general terms, absorbing stock in these zones and therefore pushing the economic recovery forward.

3. Return of Lending

Banks start to grant loans again (of up to €150.000), applying around 2.35% interests for mortgages. Thus, a house which costs €60.000 might be acquired for 314 €/month for 20 years. With a 30% debt ratio, monthly income of a household shall reach €1.100. The amount seems very little if compared to the 2007 requirement of 4.845 €/month income.

Given all these, vice-president of Alfa Inmobiliaria Jesus Duque calculates that in real terms it is by 80% cheaper to buy a home now than in 2007.

 

Original article: 20 Minutos

Translation: AURA REE

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