Employment in Real Estate Sector Suffers Fall of 4.6% in the 3rd-Quarter of 2019

28 October 2019 – Employment in real estate sector fell by 4.6% y-o-y in the third quarter of this year, its first fall in six years. The number of people employed in real estate activities dropped to 150,200 professionals, according to data from the National Statistics Institute’s (INE) Active Population Survey (EPA).

The decline marked the first year-on-year drop since the second quarter of 2013, when employment fell by 16%, amid the European real estate and financial crisis.

Original Story: Eje Prime

Adaptation/Translation: Richard D. K. Turner

Dark Clouds Gather Over Spain’s Real Estate Market as Housing Sales Fall by 21% in August

14 October 2019 Market watchers have been issuing warnings recently regarding a potential slowdown in Spain’s residential real estate market. After years of rapid growth, and after prices have reached new heights due to constrained supply, talk has turned to a moderation in growth or even some level of stagnation.

Last week, the country’s National Institute of Statistics (INE) released data on the sale of homes in August that seemed to confirm such fears. A total of 35,371 housing sales occurred in Spain in the month, the lowest figure since August 2015. The retrenchment affected both the sales of new (-21%) and existing homes (-21.1%), the latter of which accounts for approximately eight out of every ten sales. Monthly sales took a bigger hit, falling by 26.1% from July to August, the biggest decline for that month of the last five years.

Original Story: El Mundo – Marcos Iriarte

Adaptation/Translation: Richard D. K. Turner

Home Sales Fall by 9% in June

 8 August 2019

The sale of homes in Spain fell by 9% y-o-y in June, as the INE registered a total of 40,961 transactions. The fall was the steepest since February 2014.

New home sales fell by 7.8%, year-on-year, to 7,205 transactions (17.6% of the total), while existing home sales dropped by 9.2% to 33,756 transactions (82.4% of the total). Month-on-month, housing sales fell by 13.9%, according to Spain’s statistical agency, the INE.

Some regions still saw significant growth, such as Castilla-La Mancha (+9.2%), Murcia (+7.2%) and Galicia (+4.5%), while steep falls were seen in the Canary Islands (-22.5%), the Balearic Islands (-17.4%) and Aragon (-13.9%).

Market watchers point to a period of adaptation after the entry into force of the mortgage law, a less benign international economic environment and a generalised slowdown as the pace of growth moderates due to a maturing market.

Original Story: Expansión – M. G. Mayo

Adaptation/Translation: Richard D. K. Turner

Moody’s: The Average LTV on Residential Mortgages Amounted to 64.6% in Q1 2019

30 May 2019 – El Diario

According to the latest data from INE, more and more people are taking out a mortgage to buy a home in Spain. 30,716 mortgage contracts were signed in March, up by 15.8% YoY.

Many buyers are attracted by rising house prices (investment growth), which the ratings agency Moody’s considers is something “positive”. However, with personal savings rates in freefall, banks are having to lend more than ever to enable families to afford their homes.

Specifically, the percentage that the loan granted represents over the appraisal value of the property (LTV) amounted to 66.5% in Q4 2018, its highest figure ever. That figure moderated slightly to 64.6% in Q1 2019 but many families are now asking to borrow 65%-70% of the value of their homes, which means a greater risk for banks and a higher probability of defaulted payments.

According to Moody’s, whilst a portfolio with an average LTV of more than 80% has a default rate of more than 6%, a portfolio with an average LTV of less than 60% has a default rate of 1%.

Nevertheless, although some banks are now lending mortgages with LTVs of 100% in certain cases, the percentage of loans with LTVs of more than 80% is lower than it was before the crisis. Such mortgages currently account for 13.1% of the total compared with 17% in 2006.

Moreover, according to Moody’s, mortgage borrowers are better off today than they were at the outbreak of the crisis as they are in a better position to afford interest rate rises and other changes in the market thanks to the strict criteria that the financial entities have applied when granting loans in recent years.

Original story: El Diario (by Marina Estévez Torreblanca)

Translation/Summary: Carmel Drake

INE: House Sales Rose by 3.7% YoY in Q1 2019

14 May 2019 – Idealista

According to data from INE, 133,989 homes were sold in Spain between January and March 2019, which represents a YoY increase of 3.7%. It also represents the best quarterly sales figure since the spring of 2008.

Nevertheless, it is worth noting that the volume of monthly sales actually decreased during the quarter from 47,000 in January, to 43,700 in February and 42,700 in March. Second-hand properties accounted for most house sales during the period, specifically 81.1% in March, although the volume of new build transactions did grow by 14.4% during the quarter.

By autonomous region

Andalucía, Cataluña and Madrid continued to lead the ranking in terms of the regions with the most transactions signed, with 8,915, 6,904 and 6,233 units sold, respectively.

Despite the strong results, Fernando Encinar, Head of Research at Idealista urges caution in light of the new Royal Decrees published in recent months. They are generating uncertainty in the market and so are slowing down growth – families and investors alike are deciding not to use their savings to buy a home and rent it out, in the short term at least, and that trend may become more widespread over the coming months.

Original story: Idealista

Translation/Summary: Carmel Drake

Global Geopolitics Fuels Demand for Luxury Homes in Madrid

12 May 2019 – El Confidencial

Wealthy investors and families from China, Russia, Venezuela and Mexico are particularly active in the luxury home segment in Madrid, in particular in the districts of Salamanca, Chamberí, Retiro and Moncloa-Aravaca.

According to the College of Property Registrars, foreigners accounted for 6.7% of all residential purchases over €500,000 in the Community of Madrid in 2017, a figure that rose to 8.4% in 2018.

There are several pull-factors motivating these buyers including tax exemptions, golden visas (thanks to Law 14/2013), (relative) legal certainty, low rates of crime and affordable prices, compared to Miami and other European capitals. The language, climate and excellent transport infrastructure also play their role, as do the world-class universities and business schools in the Spanish capital.

A number of push-factors are also evident, which is where the geopolitical developments come into play. The political and economic crisis in Venezuela, the election of Andrés Manuel López Obrador as the President of Mexico in December, the political uncertainty in Cataluña and even the on-going Brexit saga, are all important reasons for wealthy buyers to turn their backs on their home countries in favour of Madrid when it comes to buying a property.

To date, since they were introduced in 2014, 2,948 golden visas have been granted for the purchase of luxury homes, with half going to Chinese citizens (1,476) and a fifth going to Russians (621).

Moreover, according to official statistics from Spain’s National Institute for Statistics, the number of Mexican residents in Spain has risen from just over 20,000 in 2014 to more than 25,200 by the end of 2018, of whom one third live in Madrid.

Meanwhile, the number of Venezuelan residents has increased from just over 32,000 five years ago to 57,120 in 2018. Nevertheless, in both cases, the real number of arrivals is higher since many move to Spain through family links making them entitled to Spanish passports.

Original story: El Confidencial (by Marcos García)

Translation/Summary: Carmel Drake

Andalucía’s Property Market is Operating at Four Speeds

3 March 2019 – ABC Sevilla

According to INE, more than 100,000 homes were sold in Andalucía in 2018, a figure not seen since 2008. That figure represented an increase of 13.1% YoY, but growth was far from uniform across the region.

The main driver was the province of Málaga, where almost 32,500 homes were sold last year, up by 5% YoY. In fact, Málaga, along with Barcelona, Madrid, Alicante and Valencia accounted for almost 40% of all house sales in Spain as a whole in 2018 (with 235,000 sales between the five provinces).

Elsewhere in Andalucía, 17,626 homes were sold in the province of Sevilla, up by 19% YoY. Its rate of growth was higher than in Málaga since the recovery started there two years later.

In this sense, Francisco Martínez-Cañavate, President of Fadeco Promotores (pictured above), points out that “there is a lot of demand in the province of Málaga; then there is a second speed in Sevilla; a third in Cádiz, Granada and Almería; and finally a fourth in Córdoba, Huelva and Jaén”.

Original story: ABC Sevilla (by E. Freire)

Summary/Translation: Carmel Drake

INE: One Third of House Purchases in León in 2018 were Financed by Cash

2 March 2019 – Diario de León 

According to Spain’s National Institute of Statistics (INE), 3,128 homes were sold in the province of León in 2018, of which one in three were paid for in cash. This is a growing trend in the real estate market, as savers look for investment alternatives in the face of instability in the financial markets and the high returns being offered by property, due to house price rises and rental price increases.

In the province of León, 2,024 mortgages were signed in 2018, up by 4% YoY, whereas 11% more house sales were recorded compared to 2017.

Original story: Diario de León (by María J. Muñiz)

Translation: Carmel Drake

INE: Mortgage Lending Rose by 16.5% YoY to €42.7bn in 2018

27 February 2019 – La Vanguardia

Last year, 345,186 mortgages to purchase homes were signed in Spain, up by 10.3% compared to 2017, but the banks again refrained from fully opening the financing tap: the average loan amount increased by just 5.6% to €123,727, according to data presented on Wednesday by Spain’s National Institute of Statistics (INE).

The growth in the average amount is only slightly higher than the increase in house prices (which rose by 3.9% on average last year, according to data from the Ministry of Development, albeit by much more in the large cities and their metropolitan areas, where the bulk of demand is concentrated). “The banks are adopting a conservative strategy, that’s for sure”, said Oscar Gorgues, Manager of the Chamber of Urban Property in Barcelona – “because they are still very mindful of the excesses of the boom years. For that reason too, we can say that the real estate market is healthy and there is no risk of a bubble”.

The data from INE shows that after five years of recovery in the real estate sector, the number of mortgages granted is still 71% lower than the 1.24 million mortgages granted by the banks in 2007, the last year before the burst of the real estate bubble.

According to real estate firms, the caution on the part of the banks means that the main factor causing families, and especially young people, to rent, is the fact that it is impossible for them to obtain a mortgage loan. By contrast, according to the real estate firm Forcadell, around one third of homes are now purchased without a mortgage, in operations undertaken by investors (…).

According to data from INE, the value of all of the new mortgages constituted to purchase homes last year amounted to €42.7 billion, up by 16.5% compared to 2017, due to the combined effect of increases in the number of operations and the average loan amount (…).

Original story: La Vanguardia (by Rosa Salvador)

Translation: Carmel Drake

Spain sets new foreign tourist arrival record for sixth consecutive year

4 February 2019

A total of 82.8 million people visited the country in 2018, and spent more on average than in 2017

For the sixth year in a row, Spain has set a new record for foreign tourist arrivals. There were 82.8 million international visitors last year, a 1.1% rise from 2017, according to new figures released on Friday by the National Statistics Institute (INE).

There is renewed competition from destinations such as Turkey, Tunisia and Greece

Despite the emergence of competing destinations and some adverse weather, there was a surge in arrivals in the last quarter of the year, particularly in December.

And figures show that tourist spending grew at an even faster pace, for a total expenditure of nearly €89.9 billion, representing a 3.3% rise from 2017.

The numbers come close to the ideal situation that the government and the tourism industry are aiming for: greater spending by tourists, but not so many arrivals as to create saturation, stretch public services thin and lead to local expressions of tourist-phobia.

The Industry, Trade and Tourism Ministry noted that average daily spending by individual tourists grew 7.4% to €146. This figure is a better approximation of what tourists actually spend in Spain, as the total expenditure figures also include plane fare, which is paid in the country of origin.

Tourism from the United States grew 11.8%

As for the average duration of the stay, it went down from 7.7 days in 2017 to 7.4 days in 2018.

The growth rate for international arrivals has also slowed down considerably: 1.1% from 2017 to 2018, compared with 8.7% from 2016 to 2017. This is partly due to renewed competition from destinations such as Turkey, Tunisia and Greece, which attracted more visitors from Britain and Germany, the two main source countries of tourism to Spain.

In 2018, there were 11.4 million German tourists in Spain, a 4.1% drop from the previous year, while the number of British visitors declined by 1.6% to 18.5 million. Tourism from Scandinavian countries dropped 0.7% to 5.7 million.

But these drops were offset by a jump in visitors from other countries. Tourism from the United States grew 11.8% to reach close to three million. There was also a 6.3% rise in Russian visitors, who numbered 1.2 million.

Original Story: El País – Javier Salvatierra

Foto: Paco Puentes