Spain No Longer Features in EU’s Top 10 Home Ownership Ranking

23 March 2018 – El País

77.8% of citizens resident in Spain own their own homes. In this way, the country was placed in 13th position in the ranking of European Union (EU) countries in terms of this parameter in 2016, one place below its position the previous year – after being overtaken by the Czech Republic – according to data from the European statistics institute Eurostat, and well outside of the Top 10. Compared to the European average (69.2%), the Spanish figures are still high, although each year, the percentage of homeowners is decreasing slightly to the benefit of the rental market. Ownership fever dominates in Eastern Europe, in particular, where the percentage exceeds 90% in many countries.

In 2007, the first year for which Eurostat compiled data for Spain, the country was ranked in 9th place in terms of the number of citizens owning their own home, with a percentage of 80.6%. Thus, between then and 2016, the rate has been decreasing slightly at the same time as the rates in other countries have been increasing, relegating Spain to lower positions in the ranking.

“In Spain, home ownership is decreasing slightly each year due to the economic conditions and the difficulty in accessing a mortgage”, explains José García Montalvo, Professor at the Universidad Pompeu Fabra, who points out that nowadays you need to have a permanent (employment) contract to be granted a mortgage, whereas, in 2007, you could have been a temporary worker. García Montalvo also argues that society has changed and young people – who are finding it harder to access real estate loans due to their employment conditions – regard the purchase of a home as a “problem” (…).

The professor says that the price of rental homes is rising due to greater demand, and he does not think that the decrease in home ownership is a phenomenon that is going to reverse despite the rent increases. In 2017, the price of rental homes in Spain recorded its third annual rise. The average price grew by 8.9% in 2017, the highest ever increase in the historical series of the real estate portal Fotocasa’s index, which has been compiling data since January 2006.

Eastern European countries lead the home-ownership statistics

In 2016, Romania was the country where the highest percentage of citizens owned their own home, with 96%. It was followed by Lithuania, with 90.3%; Croatia and Macedonia, with 90%; Slovakia (89.5%); Hungary with 86.3%; Poland, with 83.4%; Bulgaria (82.3%); Estonia and Malta, with 81.4%; Latvia with 80.9% and the Czech Republic with 78.2%. “The countries where citizens are most committed to buying their own home are primarily those in Eastern Europe. This is partly a result of the fact that many of those regions were communist countries and that when the market was opened up, it was shared out and everyone got involved”, says García Montalvo.

By contrast, the data from Eurostat shows that the citizens of countries with more consolidated economies back the rental market to a greater extent over the acquisition of home. Thus, Germany leads this category with 51.7% of its citizens owning their own home, followed by Austria, with 55%; and Denmark with 62%. Nevertheless, none of these countries fall below 50%, although the percentages are decreasing every year, opting for a rental model. The EU average stands at 69.2%, more than 8 percentage points below the figure in Spain.

“Rental is favoured in countries where labour mobility is higher such as in Germany and Austria. In Spain, it would be great if that was the case to boost labour mobility because ownership ties people down a lot (…).

Original story: El País (by Nahiara S. Alonso)

Translation: Carmel Drake

Homes Worth Less Than €100K Experience Highest Price Rises

15 March 2016 – El Mundo

One in every four properties brokered by the Alfa Inmobiliaria network, which has more than 200 agencies operating across Spain and Latin America, does not exceed €100,000 in terms of price. And those homes are precisely the properties that are increasing by the most in terms of price, as well as the ones that are being sold the fastest.

According to the real estate chain, one hundred thousand euros is the maximum amount that many Spaniards are willing to pay nowadays for a home to rent out. “The high yield that these homes offer is generating an increase in the price of this type of home”, says Jesús Duque, the Vice-President of Alfa Inmobiliaria. “That, and the fact that it is cheaper for buyers to purchase a home of this kind to rent. Nevertheless, there are significant differences between what a resident in Madrid or Barcelona can find versus what is available in other cities”.

“This psychological barrier seems to have instilled itself in the minds of buyers, which together with demand from investors”, says Duque, “is what is generating a higher increase in prices – of approximately 10% p.a., and, as a result, faster-closing operations”.

And regardless of whether the home is to live in or is an investment property, “this price bracket is where we are seeing the highest price rises”, says Duque.

The other feature of these operations is that the people making these purchases tend to be small-time savers and individuals who are moving out of home for the first time or buying their first home, and in many cases, they are not resorting to bank financing. “Almost 40% of buyers – and/or their families – have the savings necessary to finance the acquisition outright, which means that these operations are being closed within very short timeframes”, says Duque.

The US housing market has grown by 11%, with respect to the first month of 2015, according to The National Association of Realtors.

In Spain, we expect to see a similar evolution, says Duque. Despite the slow down in the world ecnomy, the housing market is emerging from the situation of paralysis that it underwent during the worst years of the crisis. Just like in the US, we expect to see an increase, not only in the number of operations, but also in house prices”, says Duque.

Original story: El Mundo

Translation: Carmel Drake