Tag: macroeconomic forecasts

Bank Of Spain: The Housing Market Is Not Overheating

4 April 2017 – El Mundo

The Bank of Spain (BdE) does not perceive “any signs of overheating” in the housing market, nor does it expect the real estate sector to overheat anytime soon, given that the recovery in the market is happening at the same time as the process to deleverage the economy.

During the presentation of the supervisory body’s macroeconomic forecasts for the Spanish economy (2017-2020), the Director General of Economics and Statistics at the Bank of Spain, Pablo Hernández de Cos, denied that the housing market is showing any signs of overheating.

Hernández de Cos highlighted that the housing market has been enjoying a recovery for several quarters, which is being seen in the number of transactions, the number of new builds started and the trend in prices, although the Bank of Spain does not expect “the market to overheat”.

Despite the fact that the growth rates “may be significant”, the Director of the Bank of Spain said that after a “very significant” adjustment process in the sector in terms of transactions and the correction of prices, the recovery in the market is taking place in parallel to the continuation of the process to deleverage the Spanish economy. “We are not seeing any signs of overheating”, he added.

“Uneven” reactivation

In its forecasts, the supervisory body notes that high-frequency information relating to both the number of new builds started and the number of transactions involving residential properties, indicates a “continuation of the path of gradual improvement in residential investment, whose prolongation during the forecast horizon will be based on the favourable evolution of employment, the expected continuation of propitious financing conditions and the expectation that assets are going to appreciate in value”.

Nevertheless, it forecasts that the recovery will progress in an “uneven” way by region, with the main cities and autonomous regions most focused on tourism experiencing the most intense growth. In any case, it warns that the latter areas may experience a certain moderation in demand as a result of the process for the United Kingdom’s exit from the European Union (EU).

Original story: El Mundo 

Translation: Carmel Drake

What’s In Store For The Housing Market In 2017?

28 December 2016 – Cinco Días

“The real estate market can look forward to a new smooth and long expansionary cycle”. That is the consensus of the majority of analysts who have spent the past few days preparing their end of year report and forecasts for next year. Although the forecast figures are unlikely to coincide exactly, the fact is that the trend is unanimous. Provided there are no major macroeconomic changes, in other words, provided employment continues to grow and interest rates continue to remain a minimum levels, all of the experts consulted, be they property developers, construction companies, intermediaries such as the API, notaries, registrars, appraisal companies or bankers, agree that: 2017 will be better than 2016.

This does not mean that there are no clouds on the horizon. For the consultancy firm Knight Frank, the main risk is the political context at home and, to a lesser extent, overseas. “During the months when there was a caretaker Government, many projects were frozen; now the main uncertainty is whether the new Govenrment will manage to approve the budgets”, said Ernesto Tarazona, Managing Partner of Residential and Land at Knight Frank.

In this way, provided there aren’t any new political upheavals, 2017 will be the year in which more homes are sold and constructed and at higher prices. In terms of production, experts calculate that if this year around 70,000 new homes are going to be finished, then next year that figure should increase to around 100,000. Meanwhile, in terms of transaction volumes, next year could be the first year since 2008 when we see more than half a million homes being sold once again, according to Tinsa.

On the other hand, the forecasts vary the most when it comes to house prices, with predicted increases ranging from 2% to 5%. The VI Observatory of the sector, compiled by the Spanish Association of Value Analysis (AEV), together with the Head of the Applied Economics Department at the University of Alicante, Paloma Taltavull, and a group of 21 experts states that the evolution of house prices will be contained due to two essential factors: the stock that still needs to be sold or leased, of which they calculate that 25% is owned by the banks; and the weakness in terms of demand that still persists across the majority of the country. In the opinion of these experts, prices will end this year with nominal increases of around 3.8%, and will continue to rise by around 3% in 2017. Other sources, such as Bankinter, raise that percentage to 5%, due to the booms currently happening in the real estate markets in Madrid and Barcelona, where house prices are rising at double-digit rates given the scarcity of supply of new homes.

What all of the experts seem to have rejected is that the market may generate a new bubble over the medium term, given that: house sales are growing in a sustainable way, in line with new mortgages; and they are doing so in regions with the greatest economic activity and highest levels of job creation. Moreover, the recovery in terms of the promotion of new homes will act as a buffer to prevent one-off price spikes amounting to anything more. (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake