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Solvia: The 2 “Castillas” Are The Black Sheep Of The RE Recovery

24 September 2015 – El Confidencial

Spain’s real estate market is very heterogeneous. There is nothing new about that. Madrid, Barcelona, the Costa del Sol and the (Balearic and Canary) Islands have all been showing signs of recovery for several months now, in terms of prices and the launch of new property developments.

Nevertheless, there are other areas where the desired recovery is not happening yet and other still where it is not even expected to happen, at least in the short term. The two Castillas (Castilla-La Mancha and Castilla y León) are two of these regions. The key drivers of the recovery have not been seen there yet and prices continue to be subject to downwards pressure. Or at least, those are the findings of ‘Solvia Market View‘, the first report about the real estate market prepared by Banco Sabadell’s servicer.

“Castilla-La Mancha is a market that is not showing any signs of recovery yet, since it has a large stock and a significant number of assets for sale, which are continuing to drive prices down. A slight increase in prices is only being observed in the historical centres of certain provincial capitals, such as Toledo and Cuenca, mainly due to the shortage of supply in these locations..but that is it”, explains Javier García del Río, CEO of Solvia.

Castilla y León finds itself in a very similar situation. The first timid signs of recovery are only being seen in a handful of towns and cities, where there is a shortage of supply and demand has been withheld – buyers have been waiting for prices to bottom out or have not been able to obtain financing until now. (…). According to García del Río, the drivers of the recovery are weak in these areas (Valladolid and Salamanca) and the demographic make-up does not help the recovery in demand, therefore the volume of activity is still very limited. (…).

High expectations in the País Vasco

Despite the sluggish behaviour in the two Castillas, Solvia has identified a certain degree of expectation in other parts of the peninsula, such as in the País Vasco. In Guipúzcao, for example, constructors are starting to build small developments, although the market is still quite slow there. Meanwhile, in Vizcaya, prices are stabilising for both new and second hand homes, and sales volumes are flat, according to Solvia. However, it points out that no new developments are being started there yet, unlike in Madrid for example. (…).

The stock of homes to be absorbed in Álava is still plentiful. “The financial entities (Kutxa, Caja Laboral) are starting some new property developments, which will be sold at a reasonable rate if they are marketed at competitive prices and are supported by financing”, says Javier García del Río. Meanwhile, in La Rioja, the market is normalising, especially in the north of the region, since as well as primary residences, it also supplies second homes for people from the País Vasco.

Sales have increased in Logroño, with competitive prices and a normalisation in terms of financing, although there is still a sizeable stock of new homes there. Finally, Navarra is a market that is still relatively inactive, with few operations overall; meanwhile, there has been a significant reduction in stock in Aragón and several property developments are being started at competitive prices. (…).

Finally, in Galicia and the northwest of Spain, particularly in A Coruña, there is a limited supply and reasonable demand for homes at affordable prices. In Vigo, there has not been a real estate boom, due to the suspension of the general (housing) plan during the crisis, but there is demand for finished products, whilst in Gijón, there is demand for homes in central, well-located areas.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake