BBVA Research: House Prices Will Rise By 3% In 2016

19 April 2016 – El Economista

BBVA’s Research Service forecasts that house prices will grow by around 3% this year across the country and that house sales will increase by 10% to amount to 440,000 homes, assuming that the economic and political uncertainties do not end up having a negative impact on demand.

In this sense, BBVA Research argues in its report, that the sector, just like the rest of the economy, is not without its risks.

The uncertainties that exist around global growth and relating to economic policy over the next few years may be conditioning the investment decisions of households and companies and so may end up affecting demand and supply in the sector.

In addition, the report forecasts that investment in housing will grow by 3.8%, taking its weight over GDP to 4.6%, and house prices will continue to be supported by increases in demand and the gradual reduction in supply, although this evolution will be relatively heterogeneous.

Large cities and the Mediterranean Coast

Whilst price rises will be more intense in the most active markets (i.e. in large cities and along the Mediterranean Coast); they have not started their recovery yet in the least active markets and will remain stable there in real terms.

The volume of new homes is also expected to grow in some markets in 2016…(…). As such, in terms of construction permits linked to the initiation of new homes, the report forecasts an annual growth rate of around 30%.

This, together with the greater dynamism seen in the market for land, will ensure the progress of construction activity. Moreover, the evolution of employment and household income will be positive and will continue to stimulate demand for housing.

Building work begins

The improvement observed in the real estate market has also moved to the construction segment, which will result in a significant increase in activity in the residential construction segment, which is set to be the big star of the sector in 2016.

Not only have residential prices have moved on from their minimum values, but also the trends indicate that more markets will have positive revaluations in 2016. Furthermore, mortgage financing is playing a significant role in the recovery and will be key for its development over the course of this year. The report adds that financing for property developments is expected to gradually consolidate this year.

Original story: El Economista

Translation: Carmel Drake

The RE Sector & Its Challenges For The Future

14 April 2016 – Cinco Días

“Few countries in the world have as much regulatory complexity as Spain”, said Alfonso Benavides, Chairman of the Urban Land Institute in Spain yesterday, at the Sustainable Urban Development Forum organised by the newspaper El País and sponsored by Distrito Castellana Norte. According to experts, the diversity of legislation hampers growth in a sector that has great potential for expansion. The politicisation and lack of a roadmap for management plans represent another obstacle”. “There is no strategic vision”, said Eduardo Fernández-Cuesta, Chairman of RICS in Spain.

The system is so complex (and hard to interpret) that it generates more questions than it answers. The continuous updates to the regulatory framework resolve one set of problems and create another. “The private sector can work with complexity, but not with uncertainty over timings”, warned Benavides, who pointed out that the first draft of an urban planning request alone can be up to 2,500 pages. The proposed extension of the Castellana being managed by Distrito Castellana Norte has been in the pipeline for more than 20 years, awaiting the various approvals.

“The fundamental concept is legal security, something which we currently lack”, said Ricardo Martí-Fluxa, Chairman of the Spanish Association of Real Estate Consultancy Companies. It is estimated that for every €1 million of real estate investment, between 18 and 20 jobs are created. In his opinion, we should stop demonising the economic gains of projects because the private sector, which has to drive these processes, must be able to generate a return from its investments and he noted that Town Halls in other European capital cities, such as London, are determined to give companies facilities so that they can execute such investments.

Juan Antonio Gómez-Pintado, Chairman of the Association of Real Estate Developers in Madrid, expressed the same views. He noted that the first people who are interested in putting an end to speculation are property developers. “It is absolutely essential that land is available, when it is restricted, a natural speculative process occurs. By the law of supply and demand, when land is restricted, its price increases”, he complained. (…).

The big question is, following the burst of the real estate bubble, whether Spain needs to continue building homes. The Ministry of Development, which prepares an annual report, estimates that there are 43,000 empty new homes in Madrid alone. Sources in the sector dispute those figures. “The report is prepared using a valid methodology, but it does not reflect the reality because, for example, it does not take account of the fact that the owner of a new home may not want to sell it”, said Juan Fernández-Aceytuno, CEO of Sociedad de Tasación. The actual number, if we look on a promotion by promotion basis, does not exceed 8,000 homes in Madrid. “One of the major problems is that we have run out of stock”, said Gómez-Pintado.

Nevertheless, the experts agree that, a new bubble is unlikely, especially due to the lack of available mortgage financing. In 2006, around 1.3 million loans were granted. In 2014, that figure barely reached 350,000. “There is no risk of a bubble”, said Fernández-Aceyuno. “We expect a period of stability in terms of house prices across the country”.

Original story: Cinco Días (by Carlos Santana)

Translation: Carmel Drake

RR de Acuña: Spain’s Housing Market Recovery Will Be Asymmetrical

17 September 2015 – Expansión

Real estate trends / RR de Acuña’s “Real Estate Yearbook” confirms the “stabilisation” of the upward trend in the market.

The recovery in the housing market is going to be long and asymmetrical. On the one hand, progress will be mild but steady in large cities and consolidated areas on the coast. On the other hand, provinces with a lot of stock are in for a long, idling journey. Finally, in the prime areas – districts in the centre of the regional capitals, exclusive urbanisations and luxury developments – growth will be much more marked. What does the photo look like on aggregate? The sector will continue to stabilise, without bubbles or depressions.

Those are the main findings to be drawn from the Spanish Real Estate Market’s Statistical Yearbook for 2015, prepared by RR de Acuña y Asociados. The forecasts made by the real estate consultancy firm are promising, but prudent.

After seven consecutive years of declining house purchases, 2014 marked “a turning point in the property cycle” and 2015 and 2016 are expected to close with figures that are clearly positive. Firstly, the trend in house prices is expected to normalise. In other words, the cost of buying will increase but “not excessively”, said Fernando Rodríguez de Acuña, Project Director at the company, yesterday, during the presentation of the report.

It is true that house prices will increase “significantly” in the most consolidated areas and in those regions that have smaller stocks of unsold property. In these areas – above all, Madrid, Barcelona, Valencia, Málaga and Alicante – homes will become between 3% and 5% more expensive during 2015 and 2016.

But, residential property prices will increase by even more in certain very important – the real estate sector is a market that must be divided into submarkets – . “In prime areas, prices will rise by more than 5%”, said Rodríguez de Acuña. In other words, “in the best neighbourhoods of the central districts of Madrid and Barcelona, and in the VIP areas of Marbella and Palma de Mallorca, amongst other areas”.

More sales of second hand homes

Moreover, sales will increase in Spain by more than 10.5% in 2016, and 2015 is expected to close with fewer transactions involving new homes and less self-promotion, but with a net recovery of 9.6% in the market for second hand properties. (…).

Other data also points to a considerable amount of realistic optimism. Mortgage lending will soar “clearly” by more than 20%, assures Rodríguez de Acuña, on the basis of another report from his firm that has not yet been published. (…).

Unsellable homes

The stock of unsold homes will decrease by 117,000 over the next two years. But here, two important observations are required: firstly, mortgage financing still barely accounts for one fifth of its previous levels and the total stock of homes still exceeds 1.5 million units. (…).


The Real Estate Yearbook for 2015, which is dedicated to its creator, Fernando Rodríguez y Rodríguez de Acuña, who died recently, devotes an entire section to one indicator, which is key to defining the different speeds of the recovery: the time required to sell all of the stock (‘el tiempo de disolución del stock’ or the TDS). In other words, the number of years it will take for demand to absorb the excess supply of homes for sale. Only Madrid and Navarra have a TDS of less than 3.5 years.

Meanwhile, Barcelona, Sevilla, Alicante, Málaga, Granada, Huelva, Vizcaya and Guipúzcoa all have TDSs that range between 3.5 and 5.5 years. At the negative end of the spectrum, some provinces have TDSs that exceed 10 years. Their stock is almost unsellable. In any case, the surplus is gradually decreasing, in general terms, and the cranes are returning, albeit very slowly. (…).

In summary, “the forecast restoration of the balance and subsequent growth in the real estate sector” will be two “slow” processes and there will be “different speeds in the recovery of the real estate sector, which will vary by geographical area”.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake