Tinsa: Home Prices Will Hit the Bottom in 2015
11/12/2014 – Expansion
According to Spanish appraisal firm Tinsa, home values could bottom out during the next year, depending on the economic development and employment. Moreover, the company portends a considerable recovery for the industry in 2015.
Tinsa’s head of the Product and Diversification department Pedro Soria said that although the outlook for growth and employment are optimistic and since 2013 housing prices have been stabilizing, new jobs give lower salaries, they are usually temporal and part-time, resulting in poor buyers’ solvency and weak demand.
After floor-level year 2013 with sales reaching barely 300.000 properties, Tinsa estimates that an improvement in expectations observed since the beginning of 2014 will be translated to an increase of between 15 per cent and 20 per cent in terms of sold homes.
Referring to the stock and its absorption, the appraiser calculates it will show 340.000 dwelling units.
Mr Soria believes the volume may be digested significantly in 2017. However, this does not mean that a certain surplus located badly and demonstrating doubtful quality will disappear as well.
Also, Tinsa predicts that in 2015 there will be a notable reactivation in housing development, above all because the ongoing year has already seen positive numbers of new building permits.
Thus, 2014 may close with 40.000 permits but 2015 will probably double that, reaching 80.000, which will allow to avoid supply deficit in 2017.
In regard to the main players in the industry next year, Tinsa’s executive reckons the principal role will belong to the Socimis (Spanish REITs), vehicles that mostly target properties other than residential but this asset class also starts to appear in their strategies.
Foreign demand will continue to monopolize coastal areas and the islands. In fact, the litoral zones registering pricing stabilization or even first rises are dominated by international investors.
Original story: Expasión
Translation: AURA REE