7 June 2017 – Expansión
The appraisal value of homes rose by 3.6% in May, according to the appraisal company Tinsa. This increase was primarily due to the good times being enjoyed in the sector in Spain’s major cities and provincial capitals, which saw price rises of 6.1%. This shows that the most populated areas are the regions experiencing the greatest buyer impetus, which are, in turn, boosting the main residential sub-markets, above all in Madrid and Barcelona.
“Prices are rising a lot, it’s true”, said José Luis Ruiz Bartolomé, Partner at Chamberí AM. “The rises are being concentrated in certain areas in which there is a risk of the market heating up again because there is little land. It is already happening in Madrid and Barcelona”. But, is there a risk of a bubble? “Not yet”, he answers.
Sources at Tinsa agree, given that its latest forecasts show that house prices will rise by 2% this year, according to Jorge Ripoll, Direct of Research at Tinsa, who recently spoke to this newspaper.
Each month, the IMIE index, which is calculated on the basis of house appraisals performed by the company, reflects the YoY variation in the value (per square metre) of residential properties and its level with respect to the year 2001 (base 1,000). The 1,387 points in the general index reached in May “reveal that the average price in Spain has returned to its December 2013 level”, according to data from the appraisal company. If we compare this with the previous cycle, before the outbreak of the crisis, house prices now are equivalent to those last seen in September 2003.
After the capital cities and Mediterranean Coast, the YoY growth seen in the Balearic and Canary Islands (2.9%) also stands out. The two island regions were the forerunners of the recovery, but now they are experiencing moderate growth rates, which indicates that they could be close to reaching their cruising real estate speeds.
They are followed closely by smaller towns (+2.2%), which are grouped together in the Index into a category that Tinsa calls “Other towns”. Meanwhile, the metropolitan areas saw prices remain relatively stable compared to May 2016, recording just a slight decrease of just -0.3%.
House prices are still reducing the gap generated since the end of 2007. The cumulative price decrease still amounts to 39.2%, according to Tinsa’s statistics. On the Mediterranean Coast, the area that has been hit the hardest over the last 10 years, the cumulative decrease still amounts to 45.6%, just one point higher than in the metropolitan areas, where prices have fallen by 44.5% on average since their peak. In the capitals and major cities, the cumulative decrease amounts to 41.3%, just above the national average. Homes on the Balearic and Canary Islands have depreciated by 27.7% over the last ten years and those in other towns have fallen by 35.9%.
But, even though prices in the residential market are still well below the levels seen during the bubble, inflationary fears are returning. “Players are afraid of coming last and there is a shortage of land, so property developers are buying up plots so as not to miss out”, said Ruiz Bartolomé (…).
Original story: Expansión (by Juanma Lamet)
Translation: Carmel Drake