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The Prices Of Apartments Rise By 5%, Caused By Mortgage Holdback

1 September 2015 – Expansión

REAL ESTATE RECOVERY / The bank turns the tap on and grants 26.3% more of housing loans. Sales rise by 11%, thanks to the boom in the secondary market, surging 43.5%.

Mortgage lending, home sales and price per square meter guarantee consolidation of the residential market recovery. And by recovery we mean stabilization, which is the phase that really promises getting out of the hole. After seven years of deep recession, the vital signs of the real estate are very evident, but the important thing is that the upward trend stabilizes: there is more credit (26.3% increase in June) and, therefore, more formalized sales (11.1% rise in the second quarter) and the prices go up (by 5.1% between April and June).

The first link in this chain is the mortgage. Signing of mortgage loans for house purchases reached the abovementioned interannual 26.3% in the sixth month of the year, up to 21,454, as noted yesterday by the National Statistics Institute. The average amount was 103,626 euros, 4.2% more.

The month rate rose by 8.7%. And this is the first positive data recorded in the sixth month of the year since the beginning of the crisis. The communities with the highest monthly growth rates in the number of home mortgages are the Canary Islands (38.3%), Balearic Islands (31.7%) and the Basque Country (26.8%). With the highest annual rate: Aragon (59%) and Cantabria (52.5%).

The cumulative increase of mortgage lending exceeded 21% in the first six months of the year, and that of the borrowed capital 25%. This “shows that the banks have turned on the mortgage tap and are not as strict now with the profiles they analyze”, notes Fernando Encinar, Head of studies of Idealista.

Also (and most importantly), “the average amount is maintained at very reasonable levels”, above 100,000 euros, as points out Manuel Gandarias, Director of the Office of Studies of pisos.com. And that “can revoke the revival in growth of housing prices,” adds Encinar.

Therefore it is expected “that the sector continues to grow with the sustainable encouragement from the bank,” predicts Gandarias. “The advancement in granting of mortgages is positive and confirms that 2015 will be a year of recovery for property sector in most of the state ‘, concludes Encinar.

Meanwhile, the repeat sales house price index of the Registrars Association rose by 5.1% YoY in the second quarter, and by 2.8% QoQ, “thus consolidating and enhancing the change in trend begun in 2014”, according to the registrars.

In April, May and June 87,187 house sales were registered in property records, which is the second highest quarterly result of the last nine quarters, and an increase of 11.1% compared to the same quarter of 2014. 335,163 operations were registered  in the  last twelve months, 2.7% more than the cumulative result of the first quarter of this year.

The 68,705 quarterly sales and purchases of used homes (interannual increase of 43.5%) represent the highest result of the last twenty-eight quarters. “You have to go back to the first half of 2008 to find a number of quarterly transactions in used homes so high. Surely this is a clear sign of the housing market recovery, “emphasises the report.

According to the real estate consultant Jose Luis Ruiz Bartolome, what is happening is that “the investors are following the footsteps of the market leaders, which are opportunistic funds and REITs. Besides, the economic and labour market recovery can be seen a little.”

So, “if nothing strange happens, we can say that the sector begins to stabilize,” he adds.

Original story: Expansión

Translation: Lee La