Housing Prices to Fall Further in 2014

12/05/2014 – Expansion

Real estate specialists are highly aware that the price pattern to undergo in 2014 depends on many factors: house type, localization, the amount of stock found in the nearest area and especially, on lending. They will determine the price, sales volume, new housing unit construction and so on and so forth.

Various average calculations hasten with help. Thus, according to majority of experts, mean price of a dwelling will continue its way down. Sales and loan granting are thought to slightly improve.

The first opinion is expressed mostly by the rating agencies: Standard & Poor´s and Fitch. As S&P claims, the prices will drop by 2% in 2014 and stagnate in 2015. Whilst Fitch proclaims depreciation throughout the two years.

It is worth to remind that since the maximum cap prices in 2007, houses cheapened by mean 40% (data from Tinsa).

Also other leading analysts from the sector are prudent in far-reaching expectations. Julio Gil from Horizone, José García Montalvo, Economics professor at the Pompeu Fabra University and José Luis Ruiz Bartolomé, advisor and the author of the book “Goodbye, property, goodbye”, all agree that houses will keep losing their value, much less abruptly though.

José Manuel Galindo from APCE precises that prices might go up in the places where stock is scarce. 

Another important clue is being given by Julio Rodríguez, ex-director of Banco Hipotecario who claims that “banks indeed finance 100% or even more but in detriment of not lowering the prices.” Therefore, still there is space for prices tapering down.

In the first two months of the year, house value slightly rebound. According to notaries´data, in January, an average non-subsidized dwelling price jumped by 8.9% to 1.294 Euros. In February, they appreciated again by 0.6%. However, these are just random figures and moreover distorted statistically as in fact over the two aforementioned months in 2013 almost none house was sold because all interested purchasers had decided to buy at the end of 2012 when the property tax relief was still in force.

In any case, Gil says “from the half of 2013 on the sector has started to see positive changes due to return of buyers´confidence and reappearance of investors.”

All taken into consideration, there comes the one-million-dollar question: is it the best time to buy a dwelling? In areas poor in stock probably yes, on condition that one obtains financing. For money-savers and opportunistic funds, the answer is yes as well. However, for the majority of population, it is not the right time. But their moment will arrive soon.



Original article: Expansión (by J. M. L.)

Translation: AURA REE