Gesvalt: House Prices Rise by 9% In Q2 2018

5 July 2018 – Eje Prime

House prices are continuing to rise in Spain. To buy a home, you now need to spend €1,373 per square metre, up by 9% compared to the end of the second quarter of 2017. Nevertheless, the rise is not equal across all cities. In fact, the gap between towns is continuing to grow, with differences of more than €1,000/m2, according to Gesvalt.

“The largest price deviations arise between those provinces with most services and those with least tourist appeal and a cumulative oversupply”, says the consultancy firm. Such is the case of Jaén, Teruel, Ciudad Real, Toledo, Cuenca and Cáceres, where unitary values do not even reach €850/m2.

By contrast, Gipuzkoa, Bizkaia and the Balearic Islands continue to top of the ranking, with average prices of more than €2,000/m2. Madrid has also joined the €2,000/m2 club again, exceeding the threshold for the first time in recent years.

By autonomous region, all have recorded increases in their average prices, with the exception of Andalucía and La Rioja, where prices have decreased and País Vasco, where prices have remained stable.

The drivers of the rise in house prices have been Aragón, the Balearic Islands, Cataluña, the Community of Valencia and Madrid, with double-digit increases in all cases.

Meanwhile, the rental market is also maintaining its upward trend, with Barcelona, the Balearic Islands and Madrid leading the ranking of the most expensive cities. In all three cases, rental prices comfortably exceed €14/m2/month, whilst in Jaén, Ávila, Cáceres and Ciudad Real, they average less than €4.3/m2/month.

Original story: Eje Prime 

Translation: Carmel Drake

Bankinter: House Prices Will Rise By 3%-4% In 2017 & 2018

20 February 2017 – Idealista

The rise in house prices is starting to run out of steam and will become more moderate over the next two years. That is according to forecasts from Bankinter, which explains, in a report about the real estate sector, that the limitation on the upwards potential is the consequence of several factors.

On the one hand, prices are now reaching their pre-crisis levels in many areas, primarily in prime locations and, on the other hand, the financial effort that families are having to make to acquire a home is starting to increase once more.

As a result, the capacity of families to access the residential market will be limited if prices rise at disproportionate rate. In this way, Bankinter estimates that house prices will grow by between 3% and 4% in 2017 and 2018. Moreover, the entity insists that, despite the moderation in price increases, the residential market will continue to rise.

One of the reasons is the shortage of supply, given that the number of finished homes is still at historical lows (40,000 homes were completed in 2016) and the fact that that figure cannot cover the normalised demand of around 200,000 new homes per year. “The combination of the scarcity of supply and the increase in house sales (which exceeded 400,000 operations in 2016) will continue to put upwards pressure on prices”, said the bank, which insists that, in this context, prices will continue to rise.

On the other hand, the report highlights the appeal of large cities, primarily Madrid and Barcelona, which are registering YoY price increases of between 4% and 7% and which have now recorded increases for eight quarters in a row. By contrast, average prices are still adjusting downwards slightly in YoY terms in other cities such as Bilbao and Sevilla.

Another factor that is also affecting prices is the increase in rental prices, which are also being driven upwards by the evolution of leases in the large cities, where, like in the case of the purchase market, there is a shortage of supply and high demand.

Demand for 500,000 homes.

The financial institution predicts that residential demand will continue to rise. “The upwards trend will continue for the next few years. We expect growth of almost 10% in 2017 and for demand to reach 500,000 homes by 2018”, explains the report.

But what is behind this increase? As sources in the sector have been commenting for several months, the drivers of demand are economic growth and the creation of employment, as well as the fact that housing is becoming more attractive as an investment opportunity and that financing conditions are still accessible.

Nevertheless, and this is where the experts are focusing, none of these drivers are reducing the effort that families are having to make to buy a home.

“The effort (that families are having to make) has risen again to 6.6 years of annual household income (compared to 6.2 years at the end of 2014) and there is no scope for improvement in terms of financing conditions. Finally, Sareb’s marketing of discounted homes located in areas characterised by oversupply will continue to limit the increase in average prices”, said Bankinter. (…).

Original story: Idealista

Translation: Carmel Drake

BBVA Research: House Prices Will Continue To Rise

5 September 2016 – El País

House prices have not bottomed out yet and will continue their path of gradual growth over the next few months, which will encourage house purchases, above all from people looking to reposition themselves in the market or invest. Nevertheless, that will not avoid the least active markets from continuing to show progress in terms of house prices. Geographical heterogeneity will continue to be present in the Spanish real estate market. Those were the conclulsions of the latest Real Estate Observatory in Spain report, prepared by BBVA Research, the financial institution’s research service.

Following a positive balance during the first half of the year, we expect the residential sector to continue to grow during the second half of 2016, underpinned by favourable financial conditions and the increase in foreign tourism, which is forecast to hit a new record this year.

However, the bank indicates that the economic moderation that is forecast to take place over the next few months will result in a smaller increase in house sales than that recorded during the first half of the year. Moreover, the uncertainty in terms of political-economic decisions may be reflected in demand to some extent.

Meanwhile, real estate activity will continue to build on the growth in demand and in the gradual absorption of the oversupply of housing, which points to significant growth by year end, although from relatively low levels.

That is also being demonstrated by the strong evolution of transactions involving urban land: according to data from the General Council of Notaries, the surface area of land sold during the second quarter of the year grew by 81.5% YoY, the highest increase in recent times.

Original story: El País (by S.L.L)

Translation: Carmel Drake

Moody’s: House Prices In Spain Will Rise By 5% In 2016

1 July 2016 – La Nueva España

The credit ratings agency Moody’s has forecast that house prices in Spain will increase by 5% in 2016 as a result of the recovery currently underway in the real estate sector, which is being driven, in turn, by improving economic conditions and the lowest mortgage rates since 2011.

The ratings agency explained that the low mortgage rates are due to increased competition within the banking sector and the historically low interest rates set by the European Central Bank (ECB). Euribor, the reference interest rate for mortgages, stood at -0.013% at the end of May.

In this way, Moody’s said that the number of mortgage delinquencies will continue to decline. At the end of December, the rate of mortgage defaults fell below 4.8%, at a time when the average mortgage rate in April stood at 2.03%, its minimum level since 2012.

Nevertheless, the agency explained that the performance and future of the Spanish real estate market will be ”limited” by external economic risks, given the “significant” level of real estate assets that the banks still hold in their portfolios.

“The banks should accelerate the sale of these assets to avoid the risk of oversupply reducing prices in the medium to long-term”, explained the Vice-President of Moody’s, Greg Davies.

Original story: La Nueva España

Translation: Carmel Drake

INE: Q1 2015 – House Sales Up By 9.4%, Prices Up By 1.5%

9 June 2015 – Bloomberg Business

Spanish house prices are failing to keep up with the surge in transactions, as a lingering glut of empty homes takes it toll on the market.

Values rose by 1.5%  during the first quarter from a year earlier, however purchases increased by 9.4%, according to data published today by the National Statistics Institute (INE). Prices fell by 0.6% during the period compared with the last quarter of 2014.

“Challenging supply-demand fundamentals in the sector are likely to weigh down on the pace of recovery in house prices for the remainder of 2015 and 2016,” said Raj Badiani, an economist at IHS Global Insight in London. “The slower rate of increase in house prices during the first quarter of 2015 was disappointing.”

Spanish house prices fell about 40% from peak to trough following the property industry’s implosion in 2007. Though the economy is set grow by 3.1% this year and 2.5% in 2016, an excess of empty homes and lack of first-time buyers will continue to weigh down price growth going forward, Badiani said.

Spain’s housing market faces long-term challenges as the number of people between 25 and 35 years old, a typical source of first-time home buyers, will decline by 35% over the next decade, according to the Statistics Institute. The country has an estimated one million empty homes and also has the second-highest unemployment rate in the euro area at 23%.

“Demand for housing continues to battle against some harsh fundamentals, characterised by households still wary of poor labour market conditions, implying the glut of unsold new properties will continue to linger,” Badiani said.

Original story: Bloomberg Business (by Sharon Smyth)

Edited by: Carmel Drake

Fitch: House Prices In Spain Have Bottomed Out

12 February 2015 – El Mundo

The ratings agency expects prices to stabilise at their current levels, 40% below their peak.

It also predicts that the increase in house prices will be “marked” by the greater availability of credit and a substantial improvement in the labour market.

The credit rating agency Fitch Ratings expects house prices in Spain to stabilise at their current levels, 40% below the peak levels recorded before the crisis. The agency notes that the data now shows that an equilibrium has been reached and prices will not decrease any further.

According to its report about the mortgage market in Spain, the theoretical benefits of greater access to credit are still a long way off from compensating for the over-supply (of homes) and the lack of confidence caused by high unemployment. Similarly, Fitch adds that the increase in house prices will be “marked” by greater availability of credit and a substantial improvement in the labour market.

In this sense, it stresses that interest rates are currently low and that it expects debt servicing to continue to be manageable in the medium term, but it warns that households that are in the process of deleveraging remain sensitive to interest rate rises.

On the other hand, it considers that banks are more willing to grant mortgages to solvent customers and are gradually reducing their margins, as a result of their own lower financing costs. Nevertheless, the low forecast Euribor rates for 2015 will restrict any further decline in these margins.

The agency notes that, according to data from the National Institute of Statistics (el Instituto Nacional de Estadisticas or INE), house prices rose by 0.2% in Spain in the third quarter of 2014, the first time they had risen for two consecutive months since the third quarter of 2007.

Finally, Fitch notes that unemployment decreased by 2.3 percentage points year-on-year in the fourth quarter of 2014, to 24.2% and it believes that the “less bad” conditions in the labour market are reflected in a decrease in the number of loans falling into arrears.

Original story: El Mundo

Translation: Carmel Drake