9 April 2015 – Expansión
Nine consecutive months of price rises for the first time since 2007 / According to the appraisal company Sociedad de Tasación, the average price per constructed square metre recovered significantly between January and March.
House prices rose by 3% during the first quarter of 2015, compared with the same period last year, according to data published by Sociedad de Tasación (ST). That made it the third consecutive quarter of house price increases, for the first time since the beginning of 2007, i.e. exactly eight years ago.
And so, the gradual improvement in data from the sector continues, which closed the year 2014 with positive results, leaving behind seven years of deep recession. The number of house sales increased by 2.2% and prices rose by 1.8% (in 2014), according to the National Institute for Statistics (INE).
This year, the price rises have increased to 3%, according to the statement made yesterday by Juan Fernández-Aceytuno, the CEO of the appraisal company, during his speech at the 22nd Meeting of the Financial Sector, organised by ABC and Deloitte. And he added that ST has seen a “double-digit” rise in the number of appraisals requested to support mortgages.
Nevertheless, Fernández-Aceytuno sais that “the data must be analysed with caution”, given “the low (levels) of mortgage lending and the fragility of the labour market”. This long-awaited turnaround may be starting to happen, but caution still prevails in the sector: “We have seen (positive signs) in recent quarters, but we will have to see whether the price curve ends up flattening out; currently, I can not see any signs that point clearly to an increase in demand, rather, (I see) a turning point.
For the housing market to fully recover, there needs to be an increase in demand and in the number of mortgage granted, adds the CEO of ST. In 2014, only 240,000 home loans were granted, well below the “cruising speed” required for a recovery, which experts agree is around 450,000 mortgages (per year). “When we return to the volumes last seen in 2001 and 2002, then we will be able to say that the recovery has begun”, adds Ferndández-Aceytuno.
BBVA’s research service is more optimistic. Its Spanish Real Estate Flash report for April says that (it expects) the sale of homes, construction and the signing of new mortgages to continue to rise, driven by the favourable economic climate.
It is clear that the net downwards trend is coming to an end. Albeit, gradually. In fact, the average appraisal value of homes per square metre has varied over the last seven quarters. “The last three quarters have been very positive, but the quarters prior to that involved fluctuations. As such, this positive data may be temporary”, explains Fernández-Aceytuno.
As well as the volatility and fragility of the sector, the real estate analysts’ reservations stem from real estate statistics from the General Council of Notaries, which shows that the euphoria in the residential market is cooling. The notaries reported a 10% decrease in sales in January. Nevertheless, on the upside, mortgage lending increased by 11.4% (during the same period).
Caution aside, what is certain is that the property market has changed direction. “This is the first time in seven years that we are seeing this data”, says Fernández-Aceytuno. The seven quarters at the start of the turning point in the real estate sector “have coincided with seven quarters of GDP growth”, he adds.
“There is consensus that, with the environment of low (interest) rates in the short term, it is very likely that the financial institutions that own cheap land will start financing the market once again, through property developers, whereby reviving the property market”, explains the CEO of the appraisal company.
Original story: Expansión (by Juanma Lamet)
Translation: Carmel Drake