Tinsa: Appraisal Values Rose By 3.6% Across Spain In May

7 June 2017 – Expansión

The appraisal value of homes rose by 3.6% in May, according to the appraisal company Tinsa. This increase was primarily due to the good times being enjoyed in the sector in Spain’s major cities and provincial capitals, which saw price rises of 6.1%. This shows that the most populated areas are the regions experiencing the greatest buyer impetus, which are, in turn, boosting the main residential sub-markets, above all in Madrid and Barcelona.

“Prices are rising a lot, it’s true”, said José Luis Ruiz Bartolomé, Partner at Chamberí AM. “The rises are being concentrated in certain areas in which there is a risk of the market heating up again because there is little land. It is already happening in Madrid and Barcelona”. But, is there a risk of a bubble? “Not yet”, he answers.

Sources at Tinsa agree, given that its latest forecasts show that house prices will rise by 2% this year, according to Jorge Ripoll, Direct of Research at Tinsa, who recently spoke to this newspaper.

Each month, the IMIE index, which is calculated on the basis of house appraisals performed by the company, reflects the YoY variation in the value (per square metre) of residential properties and its level with respect to the year 2001 (base 1,000). The 1,387 points in the general index reached in May “reveal that the average price in Spain has returned to its December 2013 level”, according to data from the appraisal company. If we compare this with the previous cycle, before the outbreak of the crisis, house prices now are equivalent to those last seen in September 2003.

After the capital cities and Mediterranean Coast, the YoY growth seen in the Balearic and Canary Islands (2.9%) also stands out. The two island regions were the forerunners of the recovery, but now they are experiencing moderate growth rates, which indicates that they could be close to reaching their cruising real estate speeds.

They are followed closely by smaller towns (+2.2%), which are grouped together in the Index into a category that Tinsa calls “Other towns”. Meanwhile, the metropolitan areas saw prices remain relatively stable compared to May 2016, recording just a slight decrease of just -0.3%.

House prices are still reducing the gap generated since the end of 2007. The cumulative price decrease still amounts to 39.2%, according to Tinsa’s statistics. On the Mediterranean Coast, the area that has been hit the hardest over the last 10 years, the cumulative decrease still amounts to 45.6%, just one point higher than in the metropolitan areas, where prices have fallen by 44.5% on average since their peak. In the capitals and major cities, the cumulative decrease amounts to 41.3%, just above the national average. Homes on the Balearic and Canary Islands have depreciated by 27.7% over the last ten years and those in other towns have fallen by 35.9%.

Inflationary fears

But, even though prices in the residential market are still well below the levels seen during the bubble, inflationary fears are returning. “Players are afraid of coming last and there is a shortage of land, so property developers are buying up plots so as not to miss out”, said Ruiz Bartolomé (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Risk Of A Bubble In The Rental Home Market?

4 November 2016 – El Mundo

The rental sector stopped being the bad guy the movie about the residential market a long time ago. Following the burst of the real estate bubble in 2008,  this option for accessing a home (so vilified in previous decades and so closely linked to numerous prejudices in a country where the ownership culture was deeply entrenched) quickly became an attractive an option. Its popularity has been so great that rental housing now accounts for more than 20% of the residential stock and that figure is on the rise. So much so, there are now concerns in the sector about the risk of a bubble.

The EU office for statistics, Eurostat, states that the percentage of the Spanish population living in rental homes now amounts to 21.8% and Spain’s National Institute for Statistics (INE), in its Continuous Household Survey for 2015, said that the figure amounts to 22.7% – the percentage is even higher in major cities such as Madrid and Barcelona -. If we look at this with some perspective, we see that the number of tenants has soared since 2007, when they accounted for just 6% or 7% of all dwellings.

Although perhaps most importantly, beyond the numbers, is the change in attitude towards renting. Nowadays, the hackneyed expression that renting is throwing money down the drain is no longer heard, and Spain is becoming more European in this sense. Currently, the national percentage of renters in Spain is higher than in Norway (17.2%) and is getting close to the levels seen in Portugal (25.1%), Greece (26%), Italy (26.9%), Belgium (28.6%) and Sweden (30.7%). Nevertheless, it is still a long way below the level in Switzerland, where more than half of inhabitants rent their homes (55.5%) and Germany (47.5%) (…).

Meanwhile, Servihabitat has published the first indicator that points to a boom. According to a study by the servicer’s investigation and market analysis platform, the average rental price is expected rise by more than 10% in 2016. Moreover, in the provinces of Málaga, Barcelona, Gerona and Alicante and in the uniprovincial communities of the Balearic Islands and Madrid, rental price increases are expected to exceed the average.

One of the most qualified people to talk about this situation in the rental segment is the firm Alquiler Seguro, which was established in 2007 and which nowadays brokers and manages tens of thousands of rental contracts all over Spain. The President of the company, Gustavo Rossi, acknowledges that the risk of a bubble does exist, above all, in the major cities and in the most touristy areas. “In those enclaves, the supply is insufficient for the demand that exists and, therefore, we see bull markets, with rental prices on the rise. If demand continues to grow and supply continues to stagnate, then we may see a price bubble”, he warned. Nevertheless, he points out that this possible bubble “would not be anything like the one seen with owned properties, when the construction sector stopped focusing on housing needs and took decisions based purely on speculation targets.

Antidotes to avoid the boom

To avoid the threat of a boom, Rossi advocates reactivating the supply, both from individuals as well as from property developers and investors. “The first step would be to put closed housing on the market and regulate the high flow of tourist homes”, he suggests. Similarly, he argues that “we should advance more in the professionalization of the sector to allow owners to lose their fear of renting. He also supports the need for Local Governments to commit to the rental sector “by creating specific courts to rapidly resolve conflicts and boost tax benefits for both owners and tenants, preferably via the income tax framework, and at the same time bring those rents that are submerged in the black market up to the surface”.

The forecasts for rental price increases are starting to cause problems, especially for renters. Currently, good tenants (those who pay on time), so sought after in recent years, are no longer the treasures they once were because the demand for quality is increasing. Some landlords, aware that rental prices are rising, are becoming increasingly less flexible and harsh with their current tenants, for example, when it comes to signing tacit contract renewals or granting ad hoc requests. (…).

In terms of prices, Servihabitat estimates that the average rental cost in Spain amounts to €540 for a home measuring 80m2 to 90m2, with significant variations depending on the autonomous region. In this way, the most expensive average rents are charged in the Balearic Islands (€980/month), the Community of Madrid (€940), Ceuta (€880) and País Vasco (€840), whereas the cheapest rents are paid in Galicia (€280), Extremadura (€370) and Castilla-La Mancha (€380). The servicer also identifies the trend in rental prices, which it describes as increasing in every autonomous region with the exception of Extremadura, Castilla-La Mancha, Navarra, Asturias and Ceuta and Melilla, where prices are stable. (…).

Original story: El Mundo

Translation: Carmel Drake

Large Companies Also Focus On The Rental Housing Market

26 September 2016 – El Mundo

The rental market is becoming one of the symbols of the new real estate cycle. It has gone from being an almost residual market to becoming one of the stars of the residential sector. Gone are the prejudices that used to weigh down on this regime – it seems like the best is yet to come: all indications are that the sector has a promising future ahead thanks to its potential for professionalization.

Currently, the rental market accounts for around 25% of the residential stock. The latest official data comes from 2014, when, according to Eurostat, 21.2% of Spaniards lived in rental accommodation. According to the experts, that percentage that has been increasing ever since and it is much higher in the major cities. Spain has not had this many tenants since the 1960s.

Despite the significant increase in rental accommodation, Spain is a long way below countries such as Germany (where 47.5% of homes are rented), Austria (42.8%), Denmark (36.7%), the UK (35.2%) and France (34.9%). On average, 29.9% of homes in Europe are rented. This European reality indicates that the rental market in Spain still has potential for growth.

Experts agree that one of the maxims of the new real estate cycle will be a more balanced relationship between ownership and rental. They agree that to reach this goal, the sector, which is currently mainly in the hands of individual landlords, will have to be professionalized. This professionalization has been underway for years and is now starting to consolidate itself on a large scale.

Testa Residencial

A recent example is the maturity of the professional leasing market is Testa Residencial, the new subsidiary of Merlin Properties, created following the merger of the residential portfolios previously owned by the Socimi and Metrovacesa. This joint venture, which is still in its gestation period and which is expected to adopt the Socimi structure, was born with 4,706 homes, all operated under leases. Merlin’s major commitment to residential leasing is even more important if we take into account the fact that it has become the largest real estate group in Spain and the eighth largest in Europe.

In addition, Testa Residencial’s extensive supply will grow even more thanks to upcoming injections of properties (in exchange for shares) from Banco Santander, BBVA and Banco Popular, three shareholders inherited from Metrovacesa. (…). As such, the firm will end up managing a portfolio of 10,000 units, allowing it to complete with the main real estate companies in this market.

Testa Residential is launching itself into a sector in which two large companies have competed until now: Azora and Larcovi. The first, founded in 2003, has more than 12,000 rental homes under management in different funds and companies (for example, Azora and Hispania) and is the largest private entity in this market. (…).

Concha Osácar, the founding partner at Azora, takes it as read that the rental market will continue to grow for several reasons: the increase in geographical mobility for employment purposes, the limited access to credit to make (house) purchases, the elimination of tax incentives to acquire a home, the change in mentality (“especially amongst young people”) and growing demand from families looking for better homes.

Alongside Azora, Larcovi represents the tip of the iceberg of the professionalization of the sector. It manages more than 9,000 units (…).

“To satisfy the growing demand, the supply will have to be increased. We estimate that Spain will need between 1 million and 1.2 million additional rental homes to bring it into line with its European counterparts”, says Osácar. (…).

Original story: El Mundo (by Jorge Salido Cobo)

Translation: Carmel Drake

Tinsa: House Prices Rose By 2.2% In Q1 2016

14 April 2016 – 20 Minutos

House prices rose by 2.2% during the first three months of the year. According to Tinsa, the price of flats and houses increased by 0.8% in March with respect to the same month last year.

The appraisal company considers that the average price of homes in Spain is following a “moderate” positive trend for the time being – in other words, it is increasing moderately -. The cumulative decrease since the peaks of 2007 amounts to 41%, according to Tinsa’s IMIE General and Large Markets Index.

By geographic region, the Balearic and Canary Islands, and Mediterranean Coast recorded YoY price increases of 4.3% in March in both cases. Prices rose less sharply in metropolitan areas, with a YoY increase of 2.8%. By contrast, house prices decreased in March in other towns (-1.6%) and in capital and other major cities (-0.3%).

On a cumulative basis since January, the largest increase in house prices were recorded in the Balearic and Canary Islands, with growth of 5.1%. They were followed by price rises in other towns (+3.4%), the Mediterranean Coast (+3.1%), metropolitan areas (+2.2%) and capitals and other major cities (+0.6%).

Since the peaks of 2007, house prices have decreased by 41%. The Mediterranean Coast is the area where prices have decreased by the most (-46.5%), followed by capitals and other major cities (-45.1%), metropolitan areas (-43.8%), other towns (-36.1%) and the Balearic and Canary Islands (-29.1%).

Original story: 20 Minutos

Translation: Carmel Drake