Will 2017 See The Consolidation Of The RE Sector?

30 April 2017 – Expansión

Outlook / The experts believe that house prices will rise by around 5% and sales by more than 10% this year.

The recovery in the housing market is unequivocal and so the question that the real estate consultants are now asking is: “Will 2017 be the year of consolidation?”. In other words, “Will the recovery extend across the whole country and will the sector reach cruising speed?”. That is the million-dollar question.

The consensus of the real estate experts consulted by Expansión reveals that house prices are expected to grow by between 4% and 6% in 2017. Similarly, the overall forecast is that the number of residential property sales could reach 500,000 this year, which is regarded as the “healthy” or “normal” level for a market such as Spain.

There is also consensus that the number of operations involving new and second-hand homes will rise by around 10%, at least. Spain’s National Institute of Statistics (INE) certified that 403,866 homes were sold last year, up by 13.6% compared to 2015. It was the first time since 2010 that the figure had exceeded the 400,000 threshold, and this year will be even better, in the opinion of the analysts. House sales will grow in every single autonomous region in 2017, above all in Cataluña, the Balearic Islands, the Canary Islands and Madrid, which are the four regions that are setting the trend for the sector as a whole.

Something similar is happening with average house prices. The boost from the large cities is now having an effect on medium-sized (provincial) capitals, the majority of which are clearly recovering in 2017. Not in vain, Tinsa reported a few weeks ago that the appraisal value of residential properties experienced a YoY increase of 2.7% in March, but rose more than twice as much, by 5.5%, in the provincial capitals and major cities.

Almost all of the forecasts from the major real estate analysts place the rise in prices at around 5%, and underline the disparity in the various real estate markets in the country. Servihabitat thinks that residential property prices will rise by 4.3%. The consultancy firm Aguirre Newman estimates “growth of around 6%”. JLL predicts that prices in city centres and in exclusive locations along the coast will see “increases of more than 6%”. CBRE forecasts that house prices will rise by between 4% and 5% in 2017 and by more than 6% in Madrid and Barcelona”.

The creation of new households and, above all, the significant increase in purchases by investors is spurring on demand. These two variables, combined with the significant rise in the rental market, mean that Madrid and Barcelona are still the major drivers of the market. During the first quarter of 2017, prices rose by 12.1% in the Catalan capital and by 7.7% in the Spanish capital.

The data from the other three large cities is much less extreme. The price of homes rose by just 1.1% in Valencia, fell by 1.1% in Sevilla and increased by 2.5% in Zaragoza. Other capitals saw higher increases in house prices, including Alicante (+11.7%), Vitoria (+9.3%) and Las Palmas de Gran Canaria (+7.8%). (…).

Original story: Expansión (by J. M. Lamet)

Translation: Carmel Drake

RE Experts: Now Is A Good Time To Buy A Home

1 August 2016 – El Economista

The Professional Association of Real Estate Experts (APEI) thinks that now is a “good time” to buy a home because the prices of second-hand homes “are not going to fall any further”, but it warns of the risks ahead if the political uncertainty persists. Those were the views of the President of APEI, Óscar Martínez, who highlighted that “there has been movement” in the market over the last two years and that “price increases have been widespread”.

According to the latest data from Eurostat, house prices rose in Spain by 6.3% (in Q1 2016), the highest increase since 2007, and by 4% across Europe. “There are not many new builds, which will push prices up further still”, forecasts Martínez, who thinks that now is a “good time” to buy.

In this sense, he predicts that the prices of second-hand homes are not going to fall any further and that the trend is going to be towards “stabilisation or slight increases”, above all in places where there is a shortage of housing, given that there are “very few new builds”.

Similarly, he advises homeowners to hold onto their properties unless absolutely necessary, given that “it is true that if you sell cheaply, you buy cheaply, but if you are thinking about investment, now is not the time to sell. Now is the time to sell only if strictly necessary, to change home, for example”.

The recovery will continue at a slow pace

In general, homes in good condition are more expensive than they were in 2013, when prices had decreased by 45% compared with the peak of the real estate bubble, in 2007, according to APEI, which currently represents a network of around 1,300 real estate agencies all over Spain.

The average price of private housing per square metre now stands at around €1,600/sqm, compared with €2,085/sqm in 2007, which meanst that prices now are very similar to those recorded in 2004, according to data from INE.

“Properties below that price generally have very few options for sale”, explained the President of APEI, who stated that “they are typically properties in bad locations or of poor quality, which are sold or attempted to be sold very cheaply. In other countries, those kinds of properties would be demolished”.

Regarding investments by groups, the President of APEI said that they are underway in large capitals, such as Madrid and Barcelona, but they are not been seen in the smaller capitals yet.

Meanwhile, Martínez thinks that, after the summer, and if the unemployment rate continues to fall, the recovery will continue, although at a “slow” pace, but he warns that the threat now comes from political instability. “If this insecurity persists, it will cause delays in the recovery”, he predicts.

Original story: El Economista

Translation: Carmel Drake

Notaries: Average House Prices Fall By 5.1% In 2016

18 July 2016 – Idealista.com

According to data provided by the General Council of Notaries, house prices (measured in €/sqm) have decreased since the start of 2016. Specifically, average house prices decreased by 5.1% between January and May to reach €1,261/m2. The average price in May was the lowest recorded so far this year and represents a 1.6% decrease compared with the same month in 2015.

The market for house sales normalised in terms of the number of operations during the fifth month of the year after two months of significant increases. In May, 38,845 transactions were signed, up by 11.4% YoY, but slightly below the number of operations recorded in March and April. According to the data published by the notaries, during the five months to May, 181,056 house sales were recorded, which represents an increase of 16.1% compared with the period from January to May 2015.

Sales were led by second hand apartments, which recorded 26,880 operations, representing an increase of 16.8%; they were also driven by family homes, which rose by 9.2% YoY to 7,885 transactions. Nevertheless, the sale of new homes decreased by 22.6% with respect to the same period in 2015 with 2,495 homes sold.

“The increase in house sales in May reflects the path underlying the recovery of the real estate market” confirmed the notaries.

In terms of price per square metre, the notaries found that during the fifth month of the year, house prices decreased by 1.6% YoY to €1,261/m2. Since the start of 2016, when prices amounted to €1,330/m2 (the highest figure in the last year), prices have recorded a cumulative decrease of 5.1%.

Original story: Idealista.com (by David Marrero)

Translation: Carmel Drake

Ministry Of Development: House Sales Exceeded €24Bn In H1 2015

28 September 2015 – El Economista

Sales in the market for private housing in Spain amounted to €24,196.6 million during the first half of the year, an increase of 8% with respect to the same period in 2014 (€22,401.6 million).

In this way, during the first half of 2015, the private housing market continued the positive trend that it recovered in 2014, when it reversed three consecutive years of decreases, according to data published by the Ministry of Development.

In total, 181,071 transactions involving private (free-market) homes with a total value of €24,196.6 million were signed between January and June, an increase of 10% compared with the same period in 2014. Specifically, €20,844.3 million changed hands as a result of the sale of second-hand private homes (an increase of 11.6%), whilst €3,352.4 million was exchange from the sale of new build private homes (down by -10.2%).

Madrid was the region that recorded the highest transaction volume involving private homes, with €4,650.6 million. It was followed by Andalucía (€4,443.1 million), Cataluña (€4,372.1 millions) and Valencia (€2,966 million). Next in the ranking were the Balearic Islands (€1,261.4 million), País Vasco (€1,200.6 million), the Canary Islands (€1,069.4 million), Castilla y León (€770.5million), Galicia (€724.5 million), Aragón (€515.9 million), Castilla-La Mancha (€510.9 million) and Murcia (€530.4 million).

Meanwhile, the regions where the least amount of money was exchanged in the private housing sector were: Asturias (€294.8 million), Cantabria (€264.2 million), Navarra (€221.6 million), Extremadura (€181.4 million), La Rioja (€155.3 million) and Ceuta y Melilla (€63.6 million between the two).

Original story: El Economista

Translation: Carmel Drake

ST: House Prices Increased By 3% During Q1 2015

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