Tag: Julio Gil

Registrars: 99,343 Second-Hand Homes Sold In Q2 2017

4 September 2017 – Expansión

More than 1,000 second-hand homes were sold per day in Q2. During the second quarter of 2017, 99,343 second-hand house sales were recorded, the highest quarterly figure since 2007. That statistic confirms the consolidation of the residential market.

Over the last 12 months, 429,624 properties were sold, and so the experts consider that the sector is reaching its cruising speed. Moreover, they forecast that prices will rise by around 5%, which is the “healthiest” rate to avoid a bubble (…).

Each day, 1,090 second-hand homes are sold in Spain, according to data from the College of Registrars. It is true that not all of those homes are strictly “second-hand”, given that although they have all been sold in the past, some of them have never been lived in (those sold to the banks). However, new build sales are also recovering and overall, demand is booming. Over the last twelve months, 429,624 homes were sold, which is very close to the psychological threshold of 450,000, which real estate analysts consider would represent a return to normality in the housing sector.

“In most markets, the recovery is starting to take hold or has already been established”, said Julio Gil, President of the Real Estate Research Foundation. In his opinion, there are three speeds of recovery: “The first, in large capital cities, islands and the most established areas along the coast. The second, in the most heavily populated capital cities. The third, in small capital cities and areas without much activity”.

“The forecasts indicate that 2017 will close with between 450,000 and 500,000 residential property sales. I think that we are going to reach cruising speed”, says Manuel Gandarias, Founding Partner and Director General at Civislend PFP (…).

New build sales are taking off

“New builds are starting to gain ground. All of the off-plan sales made in 2014, 2015 and 2016 are starting to be recorded in the statistics now. The numbers are going to start to grow”, says Gandarias. According to Julio Gil, this recovery depends “on demand from the youngest generation, i.e. from first-time buyers, being able to access the market”. In reality, new families have been displaced to the rental market, which is experiencing a boom: rental prices are rising significantly and returns on homes are much higher than those being offered on deposits and public debt.

Gandarias explains the effect of this displacement on the buy-to-let market as follows: “There is still a lot of upwards potential for new builds. We are always talking about pent-up demand, and that demand exists, but it still doesn’t fulfil the solvency criteria demanded by the financial institutions”. Gil adds that “ It is absolutely necessary (for society) to redouble efforts in terms of access to housing for young people, with help to make purchases that can be reversed. That is one of the major challenges facing the housing market.

In other words, the market could still grow more. That will happen if employment continues to grow. However, there is a significant threat to mortgage financing and therefore home buying: that of a possible increase in interest rates.

The inevitable rise in interest rates

“A large part of the current recovery is due to the extraordinarily low interest rates” says Gil. “A rise in rates, which will happen sooner or later, will have a significant impact on the real estate market”. The other factor that will determine the behaviour of the future growth of the sector will be the behaviour of demand from first-time buyers.

Meanwhile, house prices are continuing to rise, but not by too much, dispelling fears of a new bubble. In comparison with the same period last year, second-hand house prices have risen by 1.7%, according to Idealista, up from €1,529/m2 in August 2016 to €1,554/m2 now. The highest rises were seen in the Balearic Islands (+1.7%), followed by the Canary Islands (+0.8%), Cataluña and Castilla-La Mancha (+0.7% in both cases). They were followed by prices in Comunidad Valenciana (+0.6%) and Andalucía (+0.5%) (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

House Prices: How Much Upwards Wiggle Room Is There?

13 June 2017 – El Mundo

In many respects, the housing sector has been restored to its former glory: house sales are rising at an increasingly faster rate, the development of new homes has resumed and the granting of mortgages is growing apace. However, the jubilation in the residential market can be felt, above all, in the significant increase that prices are experiencing in the new real estate cycle.

House prices rose by 7.7% in YoY terms during the first quarter of 2017, according to Real Estate Statistics from the College of Property Registrars. In the historical series published by that body, that figure represents the highest increase in house prices since 2007, in what is now the third consecutive year of increases in the market after seven years of severe decreases. (…).

The Registrars highlight the favourable behaviour of the real estate and mortgage markets, but warn that this strong dynamism “does not justify any intensification of growth towards double digits anytime soon”.

The registrars reiterate in their analysis that “From a global perspective, the market is debating between sustainable growth and an intensification towards forgotten figures”. They attribute the significant increase in house prices to the consolidation of economic growth, creation of employment, low interest rates, activity in the mortgage market and overseas demand.

The main consequence of the variables listed by the registrars, which work in favour of rising prices is, clearly, the increase in the number of potential buyers of homes, as highlighted by Julio Gil, Managing Partner at Horizone Consulting Inmobiliario. “The factors that are driving the appreciation in house prices nowadays are demand-driven, with three very clear facets: pent-up demand from previous years, which is now coming into play, demand to reposition and demand to invest”, reflects Gil. (…).

Moreover, all indications are that prices will continue to rise, at least, in the medium term (…). What is not so clear is the intensity of that increase. (…).

According to the registrars “Our predictions are based on forecasts of moderate growth rates, defined to be YoY rates of around 5%-6%, although there may be cyclical periods of more intensive QoQ rates. It would seem that “the social and economic reality does not justify an intensification much greater than these amounts”. And they highlight: “The evolution in terms of the number of inhabitants, wage levels, the outlook in terms of interest rates etc. ought to put the brakes on the upwards trend, to a certain extent”.

That prediction is not shared by Gonzalo Bernardos, Economist and Director of the Masters in Real Estate Management and Development at the University of Barcelona. “House prices will rise by around 8% in 2017 if the net credit available to purchase a home does not increase; and will soar by around 13%, if lending rises by 5%”. For the time being, this expert does not see an obvious risk of a bubble and recalls that that only happened a decade ago after net credit had been increasing for 10 years by almost 20%. (…).

Looking ahead, Bernardos takes it for granted that the steep rise in house prices will be contained when the price of money increases (it currently stands at 0% in Europe). He calculates that, provided nothing changes in the international environment, this turning point in interest rates will happen at the end of 2018, which means that by 2019, the average YoY increase in house prices will be sustained at around 3%-4%-5%. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake