Tag: normalisation

RE Portals Regard Lower Rate Of House Sales Growth As “Normal”

30 April 2017 – Europa Press

The real estate portals regard the moderation in the growth in house sales in February (which rose by only 1.2%, according to data published in April by INE) as a “symptom of normalisation”. They also believe that this data should not be interpreted as a “step backwards”, given that “very positive”, albeit “less bulky” figures are predicted for 2017.

The Head of Research at Idealista, Fernando Encinar, said that, although the figures are not “spectacular” and the statistics reveal a month-on-month decrease, they are still “positive” since they represent the best month of February since 2011.

Moreover, he said that if we take into account the homes sold during the last twelve months, the figure amounts to more than 410,000, which is 14% higher than during the previous 12 months. Moreover, this figure that “is getting closer to a normalised market”.

In addition, the Head of Research at Fotocasa, Beatriz Toribio, considers that this slowdown in the growth in house sales is a consequence of the trend towards normalisation in the Spanish real estate market.

“2017 will be a very positive year for the sector, in which we expect the recovery to be consolidated, although it is true that the increases in the different statistics that measure the sector’s health may not be as bulky as last year”, she explained.

A “very positive” year, with a “slow and moderate” recovery

According to Toribio, the sector is resuming its activity “in a firm and consolidated way, thanks to the return of credit, the improvement in the economy and interest from investors in homes”, but she states that “we should not forget that we are starting from a very low level, after the significant decreases recorded during the years of the crisis”, which means that the recovery will necessarily be “slow and moderate”.

Andalucía, Cataluña, the Community of Valencia and the Community of Madrid were the autonomous regions that recorded the highest number of operations (during 2016), which shows that “the improvement in the sector is not distributed evenly (across the country)”.

Finally, the Head of Research at Pisos.com, Manuel Gandarias, highlights that the sales figure has now exceeded one continuous year of increases. “The YoY data for the month of February shows a decrease compared to the figure in January, which is not the case if we take into account the fact that the data reflects operations undertaken between the end and beginning of the year when there are typically fewer signings”, he added.

In this sense, Gandarias explained that, although it is true that the YoY increase is “minimal” and is no longer in the double digits, the data “should not be interpreted as a step backwards, in any way”, but rather that it represents a “symptom of normalisation, given that we are no longer making comparisons with negative figures”. “It continues the positive trend, which has now been recorded consecutively for the last 13 months”, he said.

Original story: Europa Press

Translation: Carmel Drake

INE: House Sales Rose By 14% In 2016 To 403,866

13 February 2017 – Expansión

On Friday, official data from Spain’s National Institute for Statistics (INE) certified that 2016 was the year of recovery in the housing sector. In total, 403,866 homes were sold, up by 13.6% compared with 2015. It was the third consecutive year of growth following an increase of 11.5% in 2015 and 2.2% in 2014, and it was the first time since 2010 that the property market exceeded the psychological barrier of 400,000 operations. The cumulative increase in the number of house sales since the last year of the recession in the real estate sector now exceeds 30%.

18.7% of the homes sold and purchased in 2016 were new and 81.3% were second-hand. The number of operations involving new homes decreased by 1.7%, whilst the number involving second-hand home sales rose by 17.8%, with respect to 2015.

At this point, it is worth noting that the INE considers all homes aged over five years old as “second-hand” homes, even if no-one has ever lived in them, something which happens a lot with the stock held by the banks.

“Our expectations were fulfilled during the year, despite the turmoil created by the political uncertainty and other problems, which could have easily delayed the recovery. People buying and selling homes to reposition themselves on the property ladder have driven the boom”, said the Director of Research at Pisos.com, Manuel Gandarias.

More new builds in 2017

In any case, the hegemony of the second-hand market is a trend that may start to reverse this year: “During 2017, we will see new build homes gaining momentum and growing at a faster rate”, said Gandarias.

“House sales will continue growing at a good pace, but new builds will give us more positive data and if financing is maintained at its current levels, increasingly more people will be able to access mortgages”, said Beatriz Toribio, Head of Research at Fotocasa.

The number of house sales grew in every autonomous region in 2016. The highest increases were recorded in the Balearic Islands (31%), Cataluña (20%), Extremadura (18.6%), Asturias (16%), Aragón (14.7%) and Cantabria (13.7%). The Community of Madrid registered an annual increase of 12.2%. Meanwhile, La Rioja (5.7%), Murcia (7.5%) and Galicia (7.7%) recorded lower increases with respect to 2015.

Based on the number of house sales registered, the autonomous regions with the highest number of sales per 100,000 inhabitants in 2016 were the Balearic Islands (1,521), the Community of Valencia (1,478) and the Canary Islands (1,196).

89.7% of homes sold in 2016 were free (unsubsidised) and 10.3% were social housing properties. The number of unsubsidised homes sold increased by 13.5% with respect to 2015 and the number of social housing properties rose by 14.5%, according to INE.

For Fernando Encinar, Head of Research at Idealista, the strong increase in 2016 is “an accolade to the normalisation of the sector, which despite the turmoil in the mortgage market, managed to sell 50,000 more homes”. “Over the next few months, we will see the sales statistics continue to rise, although it is possible that we will see growth rates moderate slightly, driven by higher mortgage rates”, he added. (…) .

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

INE: Mortgage Lending Reaches 5 Year High

28 November 2016 – Expansión

The month of September 2016 was the best for the residential mortgage market in the last five years. In total, lenders granted €3,018.5 million to borrwers to acquire homes, the best figure since 2011, which represents an annual increase of 12.5%, according to Spain’s National Institute of Statistics (INE).

In total, 26,667 mortgages were constituted over homes, up by 10% compared to September 2015. The average mortgage loan amounted to €113,193, up by 2.2% YoY. The value of mortgages constituted over urban properties in general amounted to €4,848.6 million, up by 3.7% compared with September 2015.

Interestingly, the percentage of fixed rate mortgages continued to gain in popularity during September; they accounted for 30% of all mortgage loans, almost one third of the market, compared with 28.3% in August (…).

These loans “are very attractive for potential house buyers given their current conditions and because they protect borrowers against possible increases in interest rates, such as the rise being considered by the ECB”, said Beatriz Toribio, Head of Research at Fotocasa.

The mortgage lending market has been on the road to recovery for more than two years now and that upwards trend was broken only in July 2016, when lending decreased by almost 15% YoY following a suspension in the inscription of some contracts for legal reasons.

Normalisation of the market

The Director of Research at pisos.com, Manuel Gandarias, expects that, as we head towards year end, “mortgage lending will continue to grow as political stability takes hold and above all, the confidence and expectations of the most solvent buyers rises”. “We have have seen two months of adjusted increases in comparison with what the statistics had previously been showing”, he said. For Toribio, the data shows that “mortgage financing is consolidating as a result of low interest rates and the liquidity that exists in the market” and that “the real estate sector is moving towards normalisation”.

In addition, in her opinion, “in 2016, in addition to a significant increase in the number of loans, we have also seen growth in the average amount loaned as a result of the behaviour of prices, which are recovering in the large cities, such as in Madrid and Barcelona, as well as along certain parts of the Mediterranean Coast.

By autonomous region

By autonomous region, the areas that recorded the highest number of mortgages constituted over homes were: the Community of Madrid (5,086), Andalucía (4,788) and Cataluña (4,631).

Nevertheless, the regions that recorded the highest YoY variations in terms of the number of mortgages granted were: La Rioja, with an increase of 59.6%; the Canary Islands, with an increase of 45.2%; and Cantabria, with an increase of 38.5%.

Finally, the regions that lent the most capital for the constitution of mortgages over homes were Madrid (€772 million), Cataluña (€616 million) and Andalucía (€470.1 million).

Original story: Expansión (by J. M. L.)

Translation: Carmel Drake

The RE Sector Attracts Overseas Investors Once More

12 April 2016 – Cinco Días

(…) Overseas capital is focusing on the property market once again. And Spain is one of the main European markets for offices, hotels and logistics. Madrid and Barcelona are leading the charge and the Socimis at the forefront of the revitalisation of the market. (…)

According to data from the Foreign Investment Register, published by the Ministry of Finance, the construction sector and real estate-related activities secured almost €7,700 million of direct foreign investment in 2015, i.e. 34.5% of the total. As such, one out of every three euros of international funds received by the Spanish economy last year was invested in the property sector.

Productive foreign investment (that which generates activity and employment) grew for the third consecutive year, to close 2015 with an increase of 11%, to €21,724 million. Of that amount, €4,706 million, i.e. 21.7%, was allocated to the construction of residential buildings and property development, compared with €1,762 million in 2014….Meanwhile, real estate-related activities (sales, purchases and rentals) accounted for 13.8% of the total, i.e. €2,992 million. (…).

In the context of this new activity, the Socimis have emerged as the main supporters of the market. The large Socimis experienced a real boom in 2015, when they flooded the MAB with their stock exchange debuts and came close to tripling their profits, which rose from €89.5 million in 2014 to €251.2 million last year, according to data from the CNMV.

Within the last year, the four largest Socimis (Merlin Properties – which has been listed on the Ibex 35 since December -, Hispania – thanks to its partnership with Barceló -, Lar España and Axiare Patrimonio) have doubled the value of the properties they own, to more than €9,200 million in total. (…).

The Socimis accounted for 41% of all funds invested in the purchase of real estate assets in 2015 – they spent €5,237 million on asset transactions. In this way, the increase in the volume of their investments amounted to 129%, in particular due to Merlin’s purchase of Testa for almost €1,800 million.

Wealthy individuals and several international funds have invested fully in these investment vehicles, attracted by the low prices in the sector and the tax advantages on offer (Socimis are exempt from paying corporation tax). The Qatar sovereign fund is trying to become the largest shareholder in Colonial; it now owns almost 30% of the Catalan real estate company.

George Soros has strengthened his commitment to Hispania, in which the millionaire John Paulson holds a stake of almost 10%. Carlos Slim controls Realia…Amancio Ortega, with his investment arm Pontegadea, now manages a very interesting and diverse asset portfolio.

The experts agree that the sector has left behind the turbulent times that it experienced following the burst of the real estate bubble. It is undergoing a period of normalisation and stabilisation – albeit a long way from its pre-crisis levels – and it is facing a new environment, with sustainable growth, in a market that is more mature and more professional.

Original story: Cinco Días (by Pablo Pico)

Translation: Carmel Drake

RE In 2016: The Experts Are Cautiously Optimistic

31 December 2015 – El Economista

Experts in the real estate sector continue to talk about the improvement experienced in the market in 2015 with caution; and they consider that 2016 will be the year of stabilisation following almost a decade of severe crisis. But, above all, the experts believe that we will see new homes being constructed once again next year.

That is according to the statistics published by the Ministry of Development for construction permits (…).

Given that it takes around 18 months for a new development to be constructed, in 2016 we can expect to see the inauguration of properties for which permits were granted at the end of 2014 and during 2015.

In this way, the President of the Spain’s Property Developers’ Association (APCE), Juan Antonio Gómez-Pintado, believes that investment funds and Socimis will both continue to be key players in 2016, although he says that the role of “property developers will become increasingly important and we will probably see (more) joint operations between these players”.

Such operations are already taking place in certain areas where new build properties are scarce, with investors approaching traditional property developers to leverage their experience in the sector in exchange for providing financial muscle. (…).

Other forecasts for next year

With this outlook, Beatriz Toribio, Head of Research at fotocasa.es expects to see a YoY increase in the price of second-hand housing in 2016, for the first time in eight years, as well as a lower rate of growth in terms of sales volumes, not because of a decrease in activity, but because the comparison will be made against figures from 2015, which will not have the same “step effect” that we have seen in 2015, with respect to the 2014 figures. (…).

Stabilisation or recovery

Against this backdrop, the experts have differing opinions when it comes to naming the current situation in the real estate sector. Juan Fernández-Aceytuno, the Director General of Sociedad de Tasación, thinks that 2016 could be the year of “consolidation”, but warns that several uncertainties still exist in the market.

Beatriz Toribio also thinks that it is still too soon to be talking about recovery because at the moment, house sales represent just one third of the volumes recorded ten years ago”, and so she prefers to describe it as the “normalisation” of the sector.

The main challenges facing the sector

In terms of the main challenges facing the real estate sector in 2016, Toribio believes that the main one is having the capacity to construct homes that new buyers actually want to purchase, in terms of quality, design and energy saving features, at prices that they are willing to pay, as well as reducing the housing stock at the same time.

According to Fernández-Aceytuno, the sector needs to open the market up to the demand that has been building up during the crisis to drain the stock of unsold properties. Finally, APCE has said that the sector’s main task for 2016 is to cultivate “more transparency” and to improve its image.

Property developers want a Housing Minister

In any case, given the political uncertainty following the general elections on 20 December, property developers in Spain believe that “having a Secretary of State or Minister for Housing would be more than justified” given the sector’s weight in terms of GDP. (…).

Original story: El Economista

Translation: Carmel Drake

RE Portals Predict House Price Rises In 2016

11 December 2015 – El Economista

Experts at the real estate portals agree that the data published last Thursday by Spain’s National Institute of Statistics (INE) is positive. It shows a YoY increase in house prices of 4.5% during the third quarter, the highest since the start of the crisis.

Moreover, the experts consider that, although the recovery in the residential sector is not homogenous across the whole of Spain, it is likely that price increases will be seen in all regions next year.

The Director of the Research Office at pisos.com, Manuel Gandarías, said that “prices will begin to increase across the board in 2016, after the areas with limited supply and high demand finished their downwards course months ago”.

“The overvaluations experienced in certain towns have all but adjusted to the new pace in the market, and few locations will see notable decreases, given that an equilibrium has now been achieved”, he added.

Meanwhile, the Head of Research at Fotocasa, Beatriz Toribio, believes that INE’s data “reflects that the housing sector has now left behind the large price decreases”, but she warns that “that does not mean that prices have bottomed out”.

“Over the next few months, we will see fluctuations characteristic of the normalisation that is happening in the sector, and it will become more apparent that the sector is recovering at two speeds, given that whilst in certain areas, sales and prices are on the rise, in others, the trend will continue to decrease for quite some time”, she added.

Sales are also normalising

Similarly, the Head of Research at Idealista, Fernando Encinar, said that the price data from INE “signals the normalisation of the sector”. (…).

The Ministry of Development also published data on Thursday about house sales, which showed that the number of transactions increased by 16.3% during the third quarter, to 93,528 units, the highest volume for that period since 2009. Encinar believes that “this is good news, although not a surprise for the sector”.

“The data also confirms the forecasts that the sector is going to normalise at two speeds, with operations growing by more than 20% on a YoY basis in some regions, and the rate of increase barely exceeding 6% in others”, he said.

Original story: El Economista

Translation: Carmel Drake