Tag: house price

80% Of Popular’s Bad Bank Will Comprise Finished Homes

24 October 2016 – El Confidencial

The first details are emerging about Project Sunrise, the bad bank in which Banco Popular is planning to segregate properties amounting to €5,800 million (gross) (€4,000 million net). Approximately 80% of its assets will be finished homes, which the entity hopes will reduce the risk associated with the project and facilitate sales of the vehicle, according to financial sources close to the project. As a result, the entity chaired by Ángel Ron hopes to reach “break even” in its third year of life, in other words, in 2019, and to generate profits thereafter.

According to the plans for the aforementioned bad bank, more than €3,000 million of Sunrise’s balance sheet will correspond to finished homes, whereas only around €400 million will relate to land – the second most important asset. In third place, the bad bank will hold developments in progress with a gross value of €300 million and finally, Popular will transfer homes for rent amounting to another €200 million. It total, more than 40,000 individual assets will be transferred to the new entity.

The bank is looking to increase the quality of the assets that it transfers to this vehicle and whereby achieve a dual objective: on the one hand, improve its prospects for sales and revenues, given that finished homes have more appeal in the market (when compared to land or developments in progress, which require additional investment to be completed); on the other hand, allow lower provisions to be recognised upon transfer, given that the prices at which the assets were awarded to the bank do not need to be reduced by as much in these cases. The average provisioning level of Sunrise’s assets will amount to 31%.

Profits from year 3 onwards

And it is precisely thanks to this greater ease to sell the bad bank’s assets that Popular expects that the new vehicle will emerge from losses during its third year of operation, in other words, in 2019 (it plans to list on the stock market in 2017). Sunrise’s business plan forecasts profits of around €50 million per year for the next two years, according to sources consulted.

To this end, the bank chaired by Ron is relying on a strong performance in the Spanish real estate market, based on good economic forecasts, low interest rates and improvements in other indicators, which are already being seen in some cases, such as the number of mortgages, the volume of house transactions and the prices of operations. According to their calculations, house prices are still undervalued and as a result, will continue to rise over the next few years.

The bad bank, vital for achieving its objectives

The segregation of the bad bank is one of the fundamental milestones in the restructuring plan that Popular presented to justify its €2,500 million capital increase in June, given that, by removing almost €6,000 million (gross) in real estate assets from Popular’s balance sheet, the entity will free up capital and strengthen its solvency levels. Nevertheless, it has faced difficulties due to the lack of buyers interested in the vehicle, and so it has decided to list the vehicle on the stock market by gifting its share capital to the banks current shareholders in the form of a dividend. (…).

Original story: El Confidencial (by E. Segovia and J. A. Navas)

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: House Prices Rose By 1.9% YoY In March

18 May 2016 – El Economista

The average house price amounted to €1,261/sqm in March, up by 1.9% with respect to the same month in 2015, according to data from the General Council of Notaries, which reflects an increase in house sales of 5.8% during the period.

Specifically, the notaries registered 38,674 transactions during the third month of the year. By type of home, the sale of flats rose by 4% and by 5.2% in the case of unsubsidised apartments.

The recovery in sales of the latter is due solely to an increase in the sale of second-hand flats, by 8.5% YoY, given that transactions involving new apartments experienced a YoY decline of 18.5%. Meanwhile, the sale of family homes rose by 13%.

Prices increase, as well as sales

In terms of prices, the cost per sqm of the homes purchased in March amounted to €1,261/sqm, which represents an increase of almost 2% YoY. This rise is explained by the increase in the prices of family homes (+7%) and flats (+1.2%).

Meanwhile, the price per sqm of unsubsidised homes rose by 2%. Within this segment, the price of second-hand homes amounted to €1,361/sqm (+1.1%) and of new homes stood at €1,678/sqm (+10.7%).

Finally, the sale of other properties in March amounted to 9,262 operations (+1.2%), of which 37% corresponded to land and plots. The average price of these transactions reached €316/sqm (+96.8%).

Increase in loans

In another vein, the evolution of the mortgage market for the acquisition of homes reflects the recovery in the real estate sector, registering an increase in total loans.

In this way, the number of mortgages granted during the month of March was 29,642, which represents a YoY increase of 4.2%. The average amount of those loans was €153,929, reflecting a YoY rise of 6.2%.

Meanwhile, the number of mortgages granted for the acquisition of properties grew by 16.5% YoY, to 19,611, due to an increase in the granting of loans to purchase homes (+17.1%), as well as a rise in the loans approved for the acquisition of other properties (+10.4%).

Meanwhile, the average amount of these loans reached €134,881 (+5.9%). In the case of homes, the average capital loaned was €125,265, up by 2.7%, and for other properties, the average loan amounted to €240,336, having increased by 29.1%.

More financing for the construction sector

Loans allocated to the construction sector increased by 2.3% YoY in March, to 472 loans in total. The average amount was €277,491, taking the YoY increase to 7%. Meanwhile, the average amount of the loans granted to construct a home rose by 13.7% to €227,582.

Finally, the percentage of homes financed using a mortgage amounted to 46.7%. Moreover, for this type of financing purchase, the loan amount accounted for 78.7% of the property value, on average.

Original story: El Economista

Translation: Carmel Drake

Residential Sales Exceeded €51,852M In Total In 2015

14 March 2016 – Expansión

In this way, the amount of funds changing hands in the market for unsubsidised housing in 2015 continued the positive trend that it recovered in 2014, the year that saw the end of three consecutive years of decreases.

In the market for unsubsidised homes in Spain, €51,853.6 million changed hands in 2015, which represented an increase of 10.3% compared with the previous year (€47,022.1 million).

In addition, investment in housing returned to its 2011 levels, when €50,924.4 million was moved in the market and recorded the highest figure since 2010,when €80,782.2 million changed hands. The figure of €51,852.6 million corresponds to 382,691 transactions involving unsubsidised homes that were closed in 2015, up by 10.2% compared with a year earlier (347,170).

Specifically, sales involving second-hand unsubsidised homes amounted to €44,842.9 million (up by 12.9%), whilst sales involving new build homes were significantly lower, amounting to just €7,010.7 million (down by -3.8%).

Madrid was the region where the highest volume of transactions involving unsubsidised homes was recorded in 2015, with €10,103 million. Next in the ranking came Andalucía (€9,130.2 million), Cataluña (€9,387.9 million) and Valencia (€6,180.7 million).

Those regions were followed by the Balearic Islands (€2,857 million), País Vasco (€2,783.1 million), the Canary Islands (€2,217.4 million), Castilla y León (€1,616.4 million), Galicia (€1,514 million), Murcia (€1,188.8 million), Aragón (€1,178.7 million) and Castilla-La Mancha (€1,078.6 million).

Meanwhile, the regions where least money changed hands in the unsubsidised housing sector were: Asturias (€641.8 million), Cantabria (€590 million), Navarra (€527.6 million), Extremadura (€425.7 million), La Rioja (€299.7 million) and Ceuta and Melilla (€132.8 million between the two).

Original story: Expansión

Translation: Carmel Drake

Pisos.com: Buyers Offer 23% Below The Asking Price

27 January 2016 – Cinco Días

Data is regularly being published about the rise in the number of house sales, how the fall in property prices is being mitigated, the gradual return of credit to the market and the impact of the overall economic recovery as the driver behind the real estate market overcoming the crisis. Nevertheless, the online portal Pisos.com has gone a step further by cross-checking information about the prices that purchasers are willing to pay and the asking prices being set by vendors; and they are checking the differences between them (…).

In its study, which is based on figures from 2015, the real estate portal notes that the differences between asking prices and offer prices have decreased in line with the improvement in the labour market (as soon as job destruction came to a halt, house sales began their timid recovery) and the relaxation of conditions to access finance.

This alignment of positions has been made possible thanks to the fact that house prices now seem to have bottomed out, at least in the majority of regions, “and buyers’ budgets have increased, thanked to increased savings and the return of credit to the market”, explain sources at Pisos.com.

In this way, during 2015, the average house price in Spain amounted to €138,150, whilst the most sought-after home (by buyers) cost €112,500 on average and had a surface area of 90 m2. The portal understands that the difference between these amounts, i.e. €25,650, represents the difference that currently separates demand and supply, which is equivalent to 23% of the most sought-after price.

Pisos.com has been performing this cross-check of supply and demand since 2009 and in its study, it shows how the relationship has evolved during the crisis and the start of the recovery. In 2009, the difference amounted to 55%, which is explained to a large extent by the sharp decline in the number of house sales; the transactions that did materialise were accounted for with a sizeable discrepancy.

Since then, the positions have moved towards each other to narrow at 20% in 2013. Nevertheless, in 2014, they increased again, to 25% and then last year, that gap moderated slightly to the aforementioned 23%. The evolution varies by region, which is to be expected in the housing market. (…).

Starting prices

Prices in six autonomous regions increased, namely: Andalucía, Aragón, the Balearic Islands, Galicia, Navarra and País Vasco. The highest average asking price is still found in País Vasco, at €232,500. At the other end of the spectrum, citizens in Murcia, Valencia, Castilla-La Mancha and the Canary Islands searched for homes with a average price of €67,500. Navarra is the only autonomous region where the price that buyers are willing to pay exceeded the asking price. The autonomous regions in which asking and offer prices were the closest were: Cantabria (9%), País Vasco (9%) and Cataluña (12%). By contrast, the largest differences were found in Murcia (where the difference still amounts to 39%), Asturias (37%) and La Rioja (36%).

In terms of other variables in the market, such as the number of transactions and the evolution of prices, the General Council of Notaries published its study yesterday, which showed that (house) sales grew by 14.7% YoY in Q3 2015, following their significant growth in the previous quarter (16.8% YoY). Moreover, the notaries highlighted that all of the autonomous regions, with the exception of Navarra, contributed to this result. (…). Meanwhile, prices grew by 2.7% YoY during the same period, just below the rate of growth seen in the previous quarter (3.6%). (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake