Spain´s Real Estate Market Ready to Take-Off

13/05/2014 – Expansion

Spanish real estate market´s heart starts to beat faster after six years of stagnation. Step by step, irregularly (some areas see rise, whilst other still crawl towards the bottom), the improvement lurks out from the dark. In such an atomized world one shall analyze data not in monthly terms but by seeking more overall tendency.

The tendency is actually reaching the turning point as many more houses are expected to sell in 2014. So states the last Real Estate Pulse report by the Instituto de la Pratica Empresarial (IPE) or the Institute of Business Practice.

As per the report, in 2014 residential sales are expected to rise by 5% mainly shwoing foreigners as the most interested buyers.

According to property registry, throughout 2013, 699.691 urban properties were sold and the figure is said to rise up to 734.675 transactions this year.

In January, the number of house purchases registered an year-on-year upsurge of 59.2%, whereas in February the appreciation marked 39.8%. The figures confirm normalization after the end of tax incentives for property purchase at the beginning of 2013.

Stock Diminishes

IPE´s report predicts that by the end of 2014 unsellable new housing stock will have decreased to 652.000 units, that is by 14.8% less than in 2013 (766.000 houses). This means that 114.000 houses abandoned by developers and banks will find an owner.

The author of the research, José Antonio Pérez, claims that “stock in excess will continue to disappear but in accordance to areas, product type and investors´profiles”. Thus, he indicates that the places where the stock remains unsold do not necessarily coincide with higher demand.

Moreover, “in 2014 construction of new houses will return to areas where the existing stock does not meet the demand, especially in so-called prime zones”.

The Business Practice Institute foresees a jump in building permit issues number “along the coastline, although there is still a lot of unsold stock”. Particularly this means that quality housing developments situated in attractive or luxury spots usually easily find a purchaser. Last year, local administrations issued 60.000 permits and for 2014 another 63.000 are expected. The construction activity is imprescindible for achieving sustainable health of the sector.

Madrid Loses With Catalonia

In terms of stock volume, the winning regions are the Valencian Community (164.000 houses) Andalusia (102.500) and Castille-La Mancha (83.700 units). Altogether, they amass 53.6% of the total of stock in excess. On the other side, Extremadura owns very few excessive dwellings (3.238), followed by Navarra (3.854) and the Balearic Islands (7.965 units). Catalonia holds 12.977 homes, almost a half of stock in excess of Madrid (27.198 dwellings).

There are two solutions for the redundant stock. Firstly, foreign investor acquistions. In 2013 , the number of units bought by overseas buyers showed 55.187, a 21.4% of all transactions and by 9.8% more than in 2012. Secondly, and the most importantly, mortgages. Banks started to lend again but this is not enough. All in all, loans are the true engine of housing.



Original article: Expansión (by Juanma Lamet)

Translation: AURA REE