30 June 2016 – El Economista
Residential mortgages recorded strong growth once again in April, providing further proof that the recovery is well underway in the real estate sector in Spain, where prices are rising once again in the major cities. Forecasts indicate that 300,000 mortgages will be granted in total this year, although it is hard to believe that those figures will ever return to the level seen during the period 2005-2007 of 100,000 mortgages per month
According to the National Institute of Statistics (INE), 23,607 residential mortgages were recorded in the property registers in Spain in April, up by 24.6% compared with the same month in 2015 and by 2.7% compared to March.
That made it the highest YoY growth rate since August 2008, well above the increase of 14.5% recorded in March. The average residential mortgage in April amounted to €108,354, up by 5.1% compared to a year earlier. (…).
The banks are playing their part
According to Beatriz Toribio, Head of Research at Fotocasa, “Banks are very interested in granting mortgages at the moment and that is boosting the market at a time when prices are stabilising, which is also encouraging transactions”. (…).
The portal Idealista agrees with this view of “normalisation” in the sector, which is being supported by low underlying interest rates in the Eurozone.
Nevertheless, they highlight that the seasonality caused by Easter may be distorting the April figures and that in any case, the mortgage business is continuing to narrow given that more mortgage repayments are being registered still than new loans being granted.
In summary, Fernando Encinar, Head of Research at Idealista, says that “if we continue at this rate of growth, it is very likely that we will close the year with around 300,000 mortgages granted, well above the figure of 245,000 recorded in 2015”.
Despite the improvement, the 23,607 new mortgages granted in April fall well short of the more than 100,000 mortgages that were granted per month, on average, during the period 2005-2007.
Higher growth in Barcelona and Madrid
(…). Nevertheless, the improvement is very uneven and, whilst in the large cities, in particular, in Madrid and Barcelona, prices bottomed out several months ago, in other areas (such as small towns, rural areas and the east coast), the recovery is not being seen yet.
On Wednesday, ST Sociedad de Tasación published a report showing YoY price increases of at least 4% in June in Madrid and Barcelona, the cities that reported the highest increases of all of the provincial capitals.
According to the study, the price increases in Madrid and Barcelona are due, at least in part, to the scarcity of new housing stock. The study concludes that “the increasing trend observed since June 2015 allows us to predict that Barcelona and Madrid are going to act as the drivers of the recovery process for new house prices, albeit at a slow pace”. (…)
Nevertheless, the ratings agency Moody’s warned that the recovery could be “limited by various uncertainties and risks”, including the abundant stock of homes that the banks still own and the uncertainties regarding the formation of a government in Spain following the second round of general elections on 26 June. (…).
Original story: El Economista
Translation: Carmel Drake