26/12/2014 – Expansión
Housing recovery will be asymmetrical, as it is in the real estate market — experts and industry players are convinced. Areas where fewer new homes remain unsold and price adjustments have been significant will take less time to return to normal levels than in the more built-up provinces.
What happens in big cities is often a leading indicator of the coming trend. And in Madrid, housing price adjustment has been more than 40% and things are starting to move again in the real estate market. That is, investors have already become more active, considering that home value drop will not deepen much further. The same thing is happening in Barcelona and major cities in the Basque country. The surprise is that real estate consultants and economists already see the light at the end of the tunnel in Mediterranean tourist destinations such as the Costa del Sol – which always falls and recovers before the average of other Spanish regions – and parts of Levante, the eastern coast.
Specifically, there are already 20 provinces that are on the road to recovery, after seven years of continuous descent. This is much better than the 2013 scenario, in which only eight provinces were showing signs of improvement. This was noted in a report by Deloitte in which the exit speed of the real estate crisis is measured by region.
According to the study, the Spanish provinces with the best real estate score are in order as follows: Madrid, Álava, Barcelona, Guipúzcoa, Vizcaya, Navarra, Cantabria, Zaragoza, Lleida, Baleares, Segovia, Valencia, Asturias, Huesca, Burgos, Valladolid, Palencia and Soria. That is to say, these are the regions where the real estate market will see the greatest recovery, i.e. more and more cranes, construction projects and mortgage subrogation will begin to pop up.
On the opposite end, Almería, Ciudad Real, Toledo and Castellón will take the longest to recover, “due to both their worse relative position in macroeconomic terms and weaker real estate sector activity, heavily penalized by oversupply.” Yes, it is remarkable that this tail-end has shrunk from having 21 provinces in 2012 to only four this year. The remaining areas (25 provinces) are at a midpoint, meaning they will recover in ‘a second phase’”.
It is also important to note that 18 of the 20 provinces that will get out of the housing crisis early are situated in the North. The other two are the Balearic Islands and Valencia (see chart). And none of the southern provinces will recover in the first of the three exit phases of the housing crisis that Deloitte has set. “The North will climb out of the crisis faster than the South, since it is not so contingent upon tourism. Furthermore, in the North, urban residential development has not been as significant as in the South,” said the Director of Deloitte Real Estate, Javier Garcia-Mateo.
The regions with the highest housing stock are Valencia (164,000 homes), Andalusia (102,500) and Castilla-La Mancha (83,700). Together, these three regions account for more than half the housing surplus at the end of 2014, according to the Real Estate Institute Business Practice Pulsometer, which estimates the stock of unsold new homes at the end of 2014 at 652,000, 14.8% less than in 2013. On the opposite side, Extremadura (3,238), Navarra (3,854) and Baleares (7,965) have the lowest number of homes remaining unsold. Catalonia has a surplus of 12,977 homes, less than half that of Madrid (27,198).
Original article: Expansión
Translation: Aura REE