324,000 New Homes Still Not Sold 10 Years On

13 July 2017 – La Vanguardia

At the end of this year, a decade after the real estate bubble burst, the number of new homes constructed during the boom that are still left unsold will amount to 324,000, according to a report on the Residential Market in Spain prepared by Servihabitat.

The stock of unsold homes is gradually decreasing: it shrank by 18.6% last year to 394,000 homes and sales are accelerating this year, in such a way that an additional 17.8% decrease is forecast by year end. “There is still stock is the areas where there has not been much demand for housing in recent years”.

But purchases are rising and in the majority of areas, the numbers may reach the technical stock level, typical of a healthy market, within a few years, said Julián Cabanillas, CEO at Servihabitat.

Homes are now being sold at a good rate even in the most depressed areas

The report prepared by the firm indicates that the majority of the unsold homes are concentrated in Castilla y León, Castilla-La Mancha, La Rioja, Cantabria, Murcia and the Comunidad Valenciana. “In some towns in Toledo, with large housing developments, there are four or five times as many homes as there are local inhabitants; there, it is hard to imagine that these homes will be absorbed and it is possible that the developments that were half-finished will have to be demolished”, he acknowledges. According to Cabanillas, the technical stock should amount to around 165,000 homes.

The absorption of new homes is happening in a very heterogeneous way. In Andalucía, where 90,000 homes will be sold this year, there are still 35,000 unsold homes leftover from the boom “which will be absorbed within a couple of years”. By contrast, in the Comunidad Valenciana, where the stock of unsold homes stands at 100,000, sales are forecast to amount to just 60,000 this year, and so the unsold homes will not be absorbed for another 5 or 6 years.

According to Cabanillas, the situation is very different in Cataluña, where less than 10,000 unsold new homes are left, which means that, in his opinion, “the market has already normalised there”. In his view, there are still some “specific and very localised areas of depression”, such as parts of Lleida, the south of Tarragona, Terrassa and Salt. By contrast, the stock in Barcelona “falls below the technical stock level”, which is leading to a lack of housing, new developments and land, which is putting pressure on prices and driving out the local population”. In his opinion, the differences between areas reflect the fact that some areas “are less appealing and that is a structural factor that will continue to exist”.

According to the servicer’s data, the sale of homes will grow by more than 17% in Cataluña this year, to exceed 78,250 units sold, whilst in Spain as a whole, the figure will reach 465,000 operations, representing an increase of 15.2% (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

BBVA Research: House Prices Will Rise By 3% In 2016

19 April 2016 – El Economista

BBVA’s Research Service forecasts that house prices will grow by around 3% this year across the country and that house sales will increase by 10% to amount to 440,000 homes, assuming that the economic and political uncertainties do not end up having a negative impact on demand.

In this sense, BBVA Research argues in its report, that the sector, just like the rest of the economy, is not without its risks.

The uncertainties that exist around global growth and relating to economic policy over the next few years may be conditioning the investment decisions of households and companies and so may end up affecting demand and supply in the sector.

In addition, the report forecasts that investment in housing will grow by 3.8%, taking its weight over GDP to 4.6%, and house prices will continue to be supported by increases in demand and the gradual reduction in supply, although this evolution will be relatively heterogeneous.

Large cities and the Mediterranean Coast

Whilst price rises will be more intense in the most active markets (i.e. in large cities and along the Mediterranean Coast); they have not started their recovery yet in the least active markets and will remain stable there in real terms.

The volume of new homes is also expected to grow in some markets in 2016…(…). As such, in terms of construction permits linked to the initiation of new homes, the report forecasts an annual growth rate of around 30%.

This, together with the greater dynamism seen in the market for land, will ensure the progress of construction activity. Moreover, the evolution of employment and household income will be positive and will continue to stimulate demand for housing.

Building work begins

The improvement observed in the real estate market has also moved to the construction segment, which will result in a significant increase in activity in the residential construction segment, which is set to be the big star of the sector in 2016.

Not only have residential prices have moved on from their minimum values, but also the trends indicate that more markets will have positive revaluations in 2016. Furthermore, mortgage financing is playing a significant role in the recovery and will be key for its development over the course of this year. The report adds that financing for property developments is expected to gradually consolidate this year.

Original story: El Economista

Translation: Carmel Drake

Tinsa: Most Homes Bought In 2015 Cost Between €50k & €100k

31 December 2015 – El País

(…) Most of the homes bought this year cost between €50,000 and €100,000. That has been the most popular price range in the provinces of Madrid, Valencia, Sevilla, Zaragoza, Málaga and the Canary Islands. Homes were more expensive in Barcelona and the Balearic Islands, where they typically cost between €100,000 and €150,000. Those are the findings of Tinsa’s IMIE Local Markets Index for Q4, published yesterday, which concludes that the average price of finished homes (new and second-hand properties) rose by 1% in Spain in 2015.

This data, which represents the first YoY increase since the beginning of 2008, reflects the changing trend in the evolution of prices. Just a year ago, in the last quarter of 2014, the same index reflected a YoY decrease of 4.5%. (…).

During 2015, average prices increased the most in YoY terms in the Catalan provinces of Girona (10.7%), Barcelona (5.8%) and Lleida (5.3%), as well as in Albacete (4.5%) and Madrid (3.3%). In terms of provincial capitals, Barcelona led the ranking with a YoY increase of 8.5%, followed by Badajoz (5.7%), Ávila (4.3%) and Madrid (3.8%). Prices are expected to increase at rates of less than 5% during 2016. Nevertheless, the evolution of the market will be determined by the political panorama in Spain, as well as by the high level of debt that the economy and families still hold, and the quality of new jobs. The creation or otherwise of new solvent demand will be the main driver, to the extent that the pent-up demand, which is currently boosting the market, loses power.

“We should not forget that the market is extremely heterogeneous and is moving at different speeds depending on the area. If we compare average prices in Q4 2015 with those from the same period last year, then average prices have increased in 21 provinces and 15 provincial capitals, but at the same time, they have decreased by more than 5% in nine provinces and ten provincial capitals”, say sources at Tinsa. (…).

How long does it take to sell a property on average? 

On average, it takes 10.2 months to sell a home in Spain, compared with 10.6 months as at June 2015. Cantabria is the province where sales take the longest: 18.6 months. Sales periods significantly above the national average are also reported in the provinces of Álava, Segovia, Ávila, A Coruña, Salamanca and Vizcaya, where it takes more than 14 months on average to sell a home. The provinces where buyers are found most quickly include: Ceuta (3.7 months), Melilla (5.3 months), Soria and Santa Cruz de Tenerife, both with an average of seven months.

Barcelona stands out as the provincial capital that requires the greatest financial effort to buy a home, with 23% of gross annual household incomes being used to finance the first year of mortgages. Meanwhile, Madrid is the major provincial capital with the most liquidity when it comes to selling a home, since it takes less than six months (5.8 months) on average to sell a home, compared with 6.1 months in Barcelona and 13.5 months in Valencia.

Original story: El País (by Sandra López Léton)

Translation: Carmel Drake