Housing prices screech to a halt and increase in Madrid and Basque Country.

Housing prices have stopped their descent in the second quarter of 2013. The Housing Prices Index, issued by the National Institute of Statistics based on the data provided by notaries, says so. That is, this index reflects the behavior of prices between April and June of this year.

The most significant matter is that the descent of prices has halted completely, both in the new homes and in the second hand ones and there are even increases in prices in Madrid (0,2%) and Basque Country (1,9%). Although in annual terms  prices have descended by 12%, during the second quarter the descent has been of 0,8%, much lower than the 6,6% registered in the first three months of the year when the highest quarterly descent since 2007 took place. The descent of 0,8% is the more moderate quarterly one since the fourth quarter of 2010.

From year to year (from the second quarter of 2012 to the same quarter in 2013), the price of free properties has moderated its adjustment, dropping 12%, opposite to the year to year descent of 14,3% experienced in the first quarter.

The figures known today reveal that the crisis is no longer affecting second hand properties, being new properties the more affected ones. Prices of second hand homes decreased by 0,1% when compared with the first quarter, while those of new homes decreased by 2,4%. This change in tendency started at the beginning of 2013.

The segment of second hand homes has suffered more greatly than the new homes one since the beginning of the crisis. This has been, among other factors, due to the collapse of sales caused by the lack of credit and the high unemployment rates. A collapse that has obliged many owners to offer important discounts so as to be able to put them on the market. There are also the aggressive sales carried out by banks in order to clean their balance sheets. Many of the properties in the hands of banks are second transmissions. Although they could be considered new homes due to the year of their construction, statistically they are considered second hand homes as there has been a first transmission, from the developer to the bank.

Therefore, the statistic known today could be revealing that the great adjustments carried out by banks on their real estate assets could be nearing their end. At least in some areas. Solvia, the real estate company of Banco Sabadell announced yesterday the launching of their new campaign of sales where it does not emphasize the aggressive discounts, but the importance of taking advantage of the opportunities still existing in the market due to the imminent recovery of prices in certain areas of the Spanish geography.

The light at the end of the tunnel should start to be seen after more than five years of real estate crisis. In fact, there have been 21 consecutive quarters with negative figures of housing prices. Housing prices started to fall in the second quarter of 2008 (-0,3%) and since then the tendency has not changed. However, there are still indicators that could continue putting pressure downward on prices such as historically low sales figures or the high descent of the number of mortgages due to the restriction of credit still present in the market.

According to Beatriz Toribio, in charge of Studies at fotocasa.es, housing prices will continue falling “during all this year and most of 2014, but more subtly. Our reports from July and August confirm that that tendency towards moderation should continue in the next few months. In 2013 we could finish the year with descents of 10%, similar rates to the one experienced last year”. She stresses that “to lower the price is the only way to get rid of the huge stock of homes in this context of credit restriction and the lack of subsidies on acquisitions”.

The Housing Prices Index published by Statistics is compatible with the exigencies of Eurostat and complements the one published quarterly by the Ministry of Infrastructure. (…)

The figures known today also reflect advances of prices in three regions. In Madrid, where prices have increased by 0,2% and in the Basque Country, with a more significant advance of 1,3%. There have been descents of prices in the other regions. (…)
According to Beatriz Toribio, prices tend to stabilize because even though they continue dropping in many areas of Spain, they are starting to stop in many others. “Those people that search for a home in the center or in well communicated areas of great cities have less margin to negotiate as prices in these areas have reached their rock bottom”.

51