Eurostat: Rental Prices Rose by 2% in Spain in 2017

8 February 2018 – Eje Prime

Rental prices are resuming momentum in the Spanish market. After years of gentle rises followed by three consecutive years of decreases, rental prices closed 2017 with an increase of 2%, almost double the rate seen in France and Italy, according to data from the European statistics agency, Eurostat. For the first time since 2008, the rise in Spain is higher than the average recorded for the European Union as a whole.

Although owning your own home is still the preferred model for the majority of the population in Spain, the rental segment has been gaining strength in leaps and bounds, especially since the crisis.

According to the latest available data, also compiled by Eurostar, in 2016, 22.2% of Spaniards lived in rental properties, compared to 77.8% that lived in their own homes. Specifically, 13.8% of the population was paying rent at market price, whilst 8.4% had a reduced or free rent.

In 2006, just 19.8% of Spaniards lived in rental properties, well below the European average, which amounted to 27.2% at the time. Nowadays, the average for the EU stands at 30.9%.

Despite the rise in rentals, prices have evolved very unevenly in recent years. In 2008, at the height of the economic crisis, residential rents soared by 4.1% in Spain, above the average for the EU, which amounted to 3.7%.

In the following years, rental prices continued to rise, except for a slight dip in 2009, although below the EU average. Nevertheless, after four years on a bullish streak, rental prices started to fall in 2014 and have been declining since then, with reductions of 0.2% in 2014, 0.6% in 2015 and 0.3% in 2016.

In 2017, for the first time in almost a decade, Spain was once again one of the fifteen countries where rental prices rose by more than the EU average, which stood at 1.7%.

The country that recorded the highest increase in rental prices was Turkey, where rents soared by 11.1% last year. It was followed, albeit at a distance, by Estonia, Lithuania, Serbia and Latvia. The first mature market to appear on the list is the United Kingdom, where house inflation reached 2.7%.

Prices also rose at a similar rate to Spain in the Czech Republic, Hungary, Belgium, Austria, Sweden and Norway. By contrast, other mature markets such as Germany, the USA (which Eurostat also analyses), Italy and France registered more moderate rises of 1.7%, 1.7%, 1.3% and 1.2%, respectively. The only country in Europe where rental prices decreased in 2017 was Island.

This data corresponds to the House Price Index, compiled by the European statistics agency Eurostat. In Spain, several sources are published each year about the evolution of rental house prices, primarily by real estate websites and agencies, although the Ministry of Development recently announced the launch of a new official quarterly statistic.

Original story: Eje Prime (by I. P. Gestal)

Translation: Carmel Drake

Rajoy Will Give Tax Breaks To Banks That Lease Empty Homes

29 November 2016 – Expansión

Housing will be one of the first major agreements of the new legislature. The PP has reached “an agreement with the opposition” to approve a non-binding proposal to establish guidelines for real estate policy until 2021. This initiative, which will be debated by the Development Committee in Congress on Wednesday, includes an important new feature: it will incentivise the occupation of empty homes owned by financial institutions, public companies, Public Administrations and “other owners” by the “most vulnerable” families. For example, those on low incomes and those who have been evicted from their homes.

To achieve this, “tax incentives, agreements with large home owners and exchanges of land” will be approved, according to sources in the Popular Parliamentary Group. “All of the parties support the agreement”, which will give rise to a new Housing Plan, to be agreed, as always, with all of the regional governments.

The tax benefits that will be approved have not been defined yet because the PP still needs to agree them with the opposition. Moreover, the Ministry of Development, which is piloting the reform is in the middle of handing over powers and is not in any rush. “The left-wing parties like the idea. The agreement that we are going to reach on Wednesday is generic and we will have to do further work to iron out the details”, say the same sources.

In the face of initiatives to penalise owners of empty homes, such as those introduced in Cataluña, País Vasco and Andalucía, the new housing agreement will seek to “promote mechanisms of cooperation so that available unoccupied homes, owned by the Public Administrations, public companies, financial institutions and other owners may be occupied by the most vulnerable members of the population” according to the text in the Proposal, which has received a favourable report from the Ministry of Development.

The banks will be the main target for these measures. The appraisal company Tinsa calculates that the financial institutions own more than 80% of the stock of empty homes. In its most recent report, based on data as at 2015, Tinsa calculates that the banks own a surplus of more than 300,000 (empty) homes. In addition, the ratings agency Fitch says that at the end of last year, the financial sector owned “around 150,000 unsellable (new) homes”.

With this reform, it will be much easier for banks to free up their empty homes. Firstly, because they will receive guaranteed income from the State in the event that they allocate them as social rental properties. Secondly, because although the lease payments will be relatively low, the tax benefit will have a compensatory effect. Thirdly, because when the entities exchange properties for land, they will remove those assets that are hard to divest from their balance sheets and they will only include new properties in better locations and with better outlooks.

INE estimates that there are 3.5 million empty homes in Spain, but that almost all of them are owned by individuals. Tinsa says that, of all of the residential properties constructed since 2008 (that have never been lived in), only around 11,670 are owned by professionals, but they are not being marketed. That figure represents 3.9% of the total commercial stock (389,000 homes in 2015). (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

INE: House Sales Recorded Historical 16.4% Increase In H1

4 August 2016 – Expansión

House sales rose by 16.4% during the first half of 2016 compared with the same period in 2015, according to data published yesterday by Spain’s National Statistics Institute (INE). It is the largest increase registered during the first six months of the year since official records began (2004). A double digit increase was also recorded in 2010, but that amounted to 10.7%, well below the current figure.

Between January and June, 207,116 residential properties were sold, i.e. 29,000 more than a year earlier. In other words, an average of 1,138 homes were sold every day. If the current trend continues, house sales will surpass the 400,000 threshold for the first time since 2010. And 2010 was the last year when more than 1,000 homes per day were sold, on average.

The autonomous region that leads the ranking of house sales growth is the Balearic Islands, where sales grew by 38% during the first half of the year. It is followed by Murcia (+24.9%), País Vasco (+22.6%) and Castilla-La Mancha (+21.1%). All of Spain is now out of the red; in fact, all of the autonomous regions recorded double-digit increases apart from La Rioja (+6.7%).

Andalucía, Cataluña, Madrid and Comunidad Valenciana account for 64% of the market, in other words, for two out of every three homes sold. (…).

“The reasonable cruising speed for the sector is between 450,000 and 500,000 sales per year”, says José García Montalvo, Professor of Applied Economics at the University Pompeu Fabra. Although the “YoY increases are high, given that they are calculated on the basis of low base levels”, there is no doubt that the residential market is recovering, gradually, to reasonable figures, thanks to: the push from private investors who are buying homes to put them on the rental market; foreigners who are committing to Spanish real estate; and, finally, the slight improvement in traditional demand for housing, which during the worst years of the Crisis was pent up and moved to the rental sector, as people were unable to access mortgage loans and/or were limited by job insecurity.

“The rise of the rental market is generating demand for housing, because more investors are purchasing properties to put them up for rent”. Therefore, “we are never going to see a return to traditional levels of home ownership (85%). Rental properties will end up accounting for 25%-30% of the total market, a reasonable proportion that is comparable to the levels seen in other countries in our environment”, adds García Montalvo.

During the month of June, 36,856 homes were sold, up by 19.4% compared with a year earlier. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Madrileños Are Willing To Invest More In Homes

14 July 2016 – Expansión

The average amount that Madrileños are willing to pay to acquire a property in the Community of Madrid currently stands at €306,000, which represents an increase of 28%  compared to 2015, according a study, ‘Demand for housing in Spain’, compiled by Casaktua, based on more than 1,100 interviews.

The study also found that the average price Madrileños are willing to pay to rent a property is €584/month, which represents a 10% increase compared to last year, when the figure amounted to €532/month.

According to the document, “(On average), Madrileños have saved 37% of the cost of the property they want to buy, showing that few expect to be able to obtain financing for 100% of their properties when it comes to buying a home”. Nationally, average savings amount to 35%.

On the other hand, the study reveals that “the average budget that Madrileños allocate to the purchase or rental of a home has increased by 19% in the last twelve months, above the average (increase) for Spain as a whole (12%).

In addition, “the number of Madrileños (renters and owners) who are thinking about moving home in the short and medium term, has increased by three percentage points in the last year (from 48% to 51%)” says the report.

On the other hand, “73% of the residents of the Community of Madrid who want to move home started looking less than two and a half years ago” and the main reasons Spaniards wish to move home are “the number of bedrooms in the home and the area in which it is located”.

Meanwhile, the Consumer Price Index (CPI) in the Community of Madrid increased by 0.5% in June with respect to the previous month, whereas prices decreased by -0.8% compared with the same period last year, according to data published on Wednesday by the National Statistics Institute (INE).

At the national level, CPI rose by 0.5% in June with respect to the previous month and increased its YoY growth rate by two tenths to -0.8%, as the price of electricity, petrol and organised trips all rose. In this way, CPI recorded two consecutive months of YoY increases.

Original story: Expansión (by Roberto Bécares)

Translation: Carmel Drake