Tag: peak

College of Registrars Creates New CPI Indicator for RE Sector: the IRAI

4 December 2017 – El Confidencial

The recovery of the real estate sector is now a reality that nobody doubts. In fact, activity in the sector in Spain has been growing in a sustained way since 2014, far from the minimum levels of 2013, but also a long way from the peak heights. The volume of – new build and second-hand – transactions is rising; more mortgages are being granted; property prices are recovering; and new build permits are increasing. Moreover, the number of companies linked to the sector filing for creditor bankruptcy is also decreasing. Each one of these parameters has its own indicators proceeding from different sources (e.g. Spain’s National Institute of Statistics (INE), real estate websites, appraisal companies, Ministry of Development…), that show the evolution of those specific parameters.

Nevertheless, from now on, there is going to be a new indicator that groups them all together and, through a complex weighting system, shows the overall evolution of activity in the real estate sector. This new indicator is the Real Estate Activity Registry Index (IRAI), compiled by the College of Registrars. According to its creators, it is set to be called the CPI of the real estate market, given that its preparation adopts a very similar methodology to that used by INE to measure inflation.

The indicator takes the year 2003 as the base year (100); it serves as the reference for analysing the evolution of real estate activity. In this way, for example, during the third quarter of this year, the IRAI amounted to 98.26% points, 30% below the maximum levels of 2007, the year the real estate bubble burst. During the first 3 months of that year, the index reached its maximum, 139.90 points. Nevertheless, since the historical minimum of 68, to which it fell in 2013, the sector has risen by 45% to date. Like in the case of CPI, the IRAI can be softened or purified to avoid seasonality, in which case, it amounts to 94.34 points.

This new index is a synthesis of different indicators. It includes real estate transactions, mortgage financing and, in addition to the above, another set of commercial activity indicators, such as the number of company constitutions, economic variables from filed annual accounts and bankrupt companies, in all cases relating to the construction and real estate sectors. For its launch, the College of Registrars has constituted a Committee of Experts, advisors from the college in each aspect listed above, who have been responsible for preparing the index and determining the weighting of each one of the indicators in the index. The IRAI will be prepared on a quarterly basis (…).

Evolution of the IRAI so far this year

The variation in the IRAI since January has been an increase of 10.12%, representing the cumulative impact of the ownership element (9.55%) and the commercial element (0.57%). In other words, the part corresponding to house sales and financing has pushed up the index by the most, compared to the boost from commercial activity. In December last year, the IRAI amounted to 89 points, compared to 98.26 now.

In this way, the groups with the greatest positive cumulative impact so far this year have been sales (cumulative impact of 6.98%) due to the significant rise in the number of sales (cumulative impact of 6.11%), especially of new and second-hand homes with growth rates of 31.87% and 27.06% and cumulative impacts of 1.19% and 4.14%, respectively.

Sales prices also grew by 3.74% (impact of 0.87%) with the price of second-hand homes having a greater impact (impact of 0.9% with a growth rate of 5.91%). Meanwhile, mortgages (cumulative impact of 2.56%) due to the significant increase in the number of mortgages (cumulative impact of 2.05%), especially for new and second-hand homes with growth rates of 21.65% and 15.42% and cumulative impacts of 0.92% and 0.94%, respectively.

From the commercial perspective, the greatest boost to activity has come from the decrease in the number of creditor bankruptcies involving both construction companies, which have decreased by 83%, and real estate companies, which have fallen by 57% (…).

Original story: El Confidencial

Translation: Carmel Drake

Cepco: New Build Starts Could Reach 80,000 Units By Year-End

7 November 2017 – Cinco Días

With barely two months to go before the end of the year, forecasts abound about what is going to happen to house prices, house sales and construction activity in the residential sector. After three years (2014, 2015 and 2016) during which the sector has gradually emerged from the worst real estate crisis in recent history, 2017 is going to be remembered as the year in which the improvement in all the variables was consolidated, property developers returned to the stock market and overseas investment in the sector reached record levels.

The only but that continues to mark this recovery is its heterogeneity, given that prices are not rising by the same amount in every autonomous region and homes are nowhere near as easy to sell in Cáceres as they are in Madrid (for example); moreover, cranes are not expected to return to certain regions for a long while yet.

Nevertheless, 2018 can be summarised by the fact that we expect to see more of the same. Prices will continue to recover, even reaching double-digit growth rates, above all in Madrid, Barcelona and certain parts of the Mediterranean Coast; transaction volumes may exceed the 500,000 unit threshold; and the number of new homes started will amount to 80,000 units, if the current rate continues.

And that is because the statistics in aggregate terms reveal some very significant increases, both in terms of transaction volumes and new home starts. For example, between January and August 2017, 56,000 new homes were sold in Spain, up by 5.8% compared to the same period last year, according to the latest report from the Spanish Confederation of the Associations of Construction Product Manufacturers (Cepco).

That represents quite an accelerated rate, with which permits for new homes are trying to keep up. During the first seven months of this year, 49,200 new permits were granted, up by 9,700 compared to the same period last year, which represents an increase of no less than 24.4% in relative terms.

That is what is causing the experts to predict that if these trends continue, then work could begin on the construction of around 80,000 new homes by the end of this year. If that volume of construction ends up being confirmed, the level of activity recorded in 2016, when 64,038 homes were started, will have risen by 25%. Nevertheless, these figures are still well below the more than 865,000 new home permits that were granted in 2006. And a considerable distance from the 200,000 or 250,000 that the consensus of experts in the sector believes will represent the real estate market’s cruising speed over the medium term.

Meanwhile, the number of finished homes also grew significantly during 2017, by 40%, although in absolute terms the figures are still minimal (33,085), as Cepco’s research acknowledges (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Rise By 37%

30 September 2016 – Expansión

The number of housing permits granted by the college of technical architects soared by 37% during the first seven months of the year, to reach 39,497, the best figure between January and July since 2011, according to the latest data from the Ministry of Development.

Despite the increase, residential construction permits are still a long way from the highs recorded in 2007, when at the height of the boom, 448,991 permits were granted between January and July, i.e. 91% more than have been issued so far this year.

The number of housing permits started the year (2016) with an increase of 44% to 4,943. In February, the YoY increase was 35%, as 5,663 permits were granted, whilst in March the figure doubled to 6,176. In April, the increase was more moderate, up by 6.5% to 4,795 permits and in May the number soared by 79% to 7,985. In June, the figure rose by just 0.6% and in July, double-digit growth returned with an increase of 21%.

The total number of permits granted for new builds, renovations and extensions during the seven months to July was 56,407, which represents an increase of 24.6% with respect to 2015.

By property type, the number of permits granted to construct block housing rose by 45.5%, to 29,362 licences, whilst the number granted for family homes grew by 17% to 10,129.

In terms of surface area, the average size of family homes amounted to 200 sqm, whilst the average size of apartments in block housing stood at 117 sqm.

Since the Ministry of Development began to prepare these statistics in 1991, the number of permits reached their historical monthly minimum in August 2013, when just 1,585 permits were granted. The historical monthly maximum was recorded in September 2006, when 126,753 permits were granted.

Original story: Expansión

Translation: Carmel Drake

Ministry Of Development: Urban Land Prices Rose By 6.6% In Q2

16 September 2016 – Expansión

The market for urban land is starting to show signs of recovery. The price of plots of land rose by 6.6% during the second quarter of the year, to amount to €163.4/sqm. It is the best figure since Q4 2012, although it is still light years away from the peak recorded in 2007, at the height of the real estate boom, when prices reached €285/sqm.

One of the main conclusions coming out of the statistics published yesterday by the Ministry of Development is that, thanks to the real estate pull in the capital and Barcelona, the Community of Madrid and Cataluña account for almost half of the market for urban land. Specifically, they accounted for a total sales volume of €351.9 million, i.e. 47% of the total volume for Spain (€751.1 million). This most recent figure is 21.7% higher than a year ago. The total surface area sold in Spain amounted to 5.6 million sqm, up by 7.7%.

The total value of land sold soared by 85% in Barcelona and by 11% in Madrid.

The number of transactions grew by 16% YoY across Spain. In April, May and June, 4,435 plots of land were sold, compared to 3,819 during Q2 2015. The most significant increase was recorded in municipalities with more than 50,000 inhabitants, where sales rose by 20%. In towns with between 10,000 and 50,000 inhabitants, there were 1,580 transactions, up by 24.6%.

In municipalities with more than 50,000 inhabitants, the highest average prices were reported in the provinces of Barcelona (€485/sqm, equivalent to triple the average for Spain), Madrid (€456/sqm) and the Balearic Islands (€373/sqm). The lowest prices were recorded in Guadalajara (€72.6/sqm, less than half the national average), Cádiz (€100/sqm) and Tarragona (€101.4/sqm).

Prices rose by just 0.1% in the cities, given that Madrid pushed down the statistics with a decrease of 14%. According to the real estate consultant, José Luis Ruiz Bartolomé, that is a result of the comparison with data from 2015, when “there was very little urban land available in Madrid, and investors sought refuge in plots of land in the most solvent areas, whilst this year land sales have spread across the whole city and are no longer limited to just the central areas”.

In Barcelona, the increase in land prices amounted to 3.5% during Q2 2016.

The Ministry of Development also published statistics yesterday about the appraisal value of unsubsidised homes, which rose by 2% YoY to €1,506.4/sqm in Q2 2016.

After 26 quarters of YoY decreases in house prices, which began at the end of 2008, “this data represents the fifth consecutive quarter of nominal price increases”, said the Ministry. In real terms, in other words, accounting for the effect of inflation, the increase amounted to 2.9%.

Ten autonomous regions reported YoY increases, led by the Balearic Islands (+5.9%), Madrid (+4.8%), Cataluña (+4.6%), the Canary Islands (+2.9%), Extremadura (+2.4%), Ceuta and Melilla (+2.3%) and Galicia (+1.4%). By contrast, the other regions reported YoY decreases – in appraisal prices, not in sales prices – led by Navarra (with a decrease of -2.2%), Aragón (-1.9%), País Vasco (-1.7%) and Cantabria (-1.3%).

House values are now 28.3% lower than their maximum levels, reached during Q1 2008. (…).

Original story: Expansión (by Juanma Lamet)

Translation Carmel Drake

RE Experts: Now Is A Good Time To Buy A Home

1 August 2016 – El Economista

The Professional Association of Real Estate Experts (APEI) thinks that now is a “good time” to buy a home because the prices of second-hand homes “are not going to fall any further”, but it warns of the risks ahead if the political uncertainty persists. Those were the views of the President of APEI, Óscar Martínez, who highlighted that “there has been movement” in the market over the last two years and that “price increases have been widespread”.

According to the latest data from Eurostat, house prices rose in Spain by 6.3% (in Q1 2016), the highest increase since 2007, and by 4% across Europe. “There are not many new builds, which will push prices up further still”, forecasts Martínez, who thinks that now is a “good time” to buy.

In this sense, he predicts that the prices of second-hand homes are not going to fall any further and that the trend is going to be towards “stabilisation or slight increases”, above all in places where there is a shortage of housing, given that there are “very few new builds”.

Similarly, he advises homeowners to hold onto their properties unless absolutely necessary, given that “it is true that if you sell cheaply, you buy cheaply, but if you are thinking about investment, now is not the time to sell. Now is the time to sell only if strictly necessary, to change home, for example”.

The recovery will continue at a slow pace

In general, homes in good condition are more expensive than they were in 2013, when prices had decreased by 45% compared with the peak of the real estate bubble, in 2007, according to APEI, which currently represents a network of around 1,300 real estate agencies all over Spain.

The average price of private housing per square metre now stands at around €1,600/sqm, compared with €2,085/sqm in 2007, which meanst that prices now are very similar to those recorded in 2004, according to data from INE.

“Properties below that price generally have very few options for sale”, explained the President of APEI, who stated that “they are typically properties in bad locations or of poor quality, which are sold or attempted to be sold very cheaply. In other countries, those kinds of properties would be demolished”.

Regarding investments by groups, the President of APEI said that they are underway in large capitals, such as Madrid and Barcelona, but they are not been seen in the smaller capitals yet.

Meanwhile, Martínez thinks that, after the summer, and if the unemployment rate continues to fall, the recovery will continue, although at a “slow” pace, but he warns that the threat now comes from political instability. “If this insecurity persists, it will cause delays in the recovery”, he predicts.

Original story: El Economista

Translation: Carmel Drake

Ministry Of Development: Housing Permits Soared By 57% In Q1 2016

31 May 2016 – Expansión

More signs of acceleration in the construction sector. The number of permits to construct new homes have recorded their highest figure since 2011, although they are still a long way below the figures seen in 2006.

The number of housing permits granted by the college of architects to construct homes soared by 57% during the first quarter of the year to 16,782, the best figure recorded during the first three months of a year since 2011, according to the latest statistics from the Ministry of Development.

Despite the increase, the number of housing permits are still a long way below the highs recorded in 2006, at the height of the boom in the real estate sector (…).

The total number of permits granted for new builds, renovations and extensions during the three months to March amounted to 16,979, which represents an increase of 36% with respect to 2015.

By type of property, permits to construct housing blocks rose by 64%, to 12,425; whilst the number of permits granted to build family homes increased by 39% to reach 4,356 permits.

In terms of surface area, the average size of family homes amounted to 203.6 sqm, whilst the average size of flats stood at 118 sqm.

The number of permits granted started the year with a bang, up by 44% in January to 4,943. In February, the YoY increase amounted to 35%, with 5,663 permits, whilst in March the number doubled to reach 6,176.

Since the Ministry of Development began to compile these statistics in 1991, the number of permits granted hit a historical monthly low in August 2013, when just 1,585 licences were granted. The maximum high was recorded in September 2006, with 126,753 permits granted.

Original story: Expansión

Translation: Carmel Drake

Ministry Of Development: House Prices Rose By 1.8% In 2015

26 February 2016 – Expansión

The residential market is continuing to show signs of stabilisation and is now bracing itself, gradually, for an undeniable improvement. To this end, we have now received official confirmation of the real estate recovery. The news was announced yesterday by the Ministry of Development: house prices increased by 1.8% last year.

It is the first YoY increase in house prices for eight years and the third consecutive quarter of positive growth. The average appraisal value per square metre of free (unsubsidised) homes amounted to €1,490.10/m2 (in Q4 2015), which represents a positive QoQ variation of 1.0%. In real terms, excluding inflation, (unsubsidised) house prices increased by 2.1%.

The average home now costs 29.1% less than in the first quarter of 2008, at the peak of the real estate bubble. On the other hand, compared with the minimums recorded in the third quarter of 2014, prices have now recovered by 2.4%. New homes (those that are less than five years old, according to the Ministry, led by Ana Pastor) became 1.1% more expensive last year, taking their average value to €1,738/m2, whilst second-hand homes decreased in value by 1.8%, to €1,481/m2.

By region

The appraisal value of residential properties is now on the increase in 14 regions, in particular, in the Balearic Islands (5.4%), Madrid (3.4%), La Rioja (3.2%), Cataluña (3.0%), the Canary Islands (3.0%), Castilla y León (2.6%) and Navarra (2.2%). By contrast, Cantabria (-4.0%), País Vasco (-1.3%) and Murcia (-0.1%) are still recording decreases. The highest house prices in towns with more than 25,000 inhabitants were recorded in San Sebastián (€3,133/m2), Getxo (€2,699/m2), Barcelona (€2,553/m2), Ibiza (€2,513/m2), Sant Cugat del Vallès (€2,505/m2), Madrid (€2,504/m2) and Pozuelo de Alarcón (€2,490/m2).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

EU: House Prices In Spain Will Rise By 6% Before 2017 YE

23 February 2016 – El Economista

Spain and Ireland, two of the European countries that suffered the most from the burst of the housing bubble, will see their property prices rise again over the next few years.

That is according to the winter forecasts published by the European Commission, which expects real house prices to increase by 6.5% until 2017 in the case of Ireland and by 6% in the case of Spain during the same period. Malta, where prices are also expected to increase by 6%, completes the podium.

Although house prices are expected to recover, the EU notes that loans taken out to purchase homes continued to decrease (in Spain) in 2015, as well as in Latvia, Hungary, Portgual, Ireland and Greece. In the case of Spain, the decrease amounted to 4% in 2015, below only Latvia and Hungary.

At the other end of the spectrum is Greece, where the EU expects house prices to fall further, in that case by 1.5%. According to the Commission’s report, Greece was the only country not to experience improvements in the financing conditions for homes, which were seen across Europe in 2015. According to the EU, the improvements in financing conditions lie behind the recovery in property prices and only Greece remains at the side-lines. In most countries, the improvement began back in 2014, apart from in Croatia, Lithuania and Italy, which all relaxed their financing conditions in 2015.

Where will prices fall?

Besides Greece, the EU predicts that house prices will fall in three other countries, namely in: Belgium, France and Bulgaria.

The Commission says that the ratio of house prices to disposable income in Spain amounted to 10.1 in 2014, well below the figure of 15.6 recorded in 2007, when the ratio peaked and also significantly above the figure of 8.6 registered in 2000. Ireland has experienced a similar evolution to Spain; there, house prices represented 13x income in 2000, increased to a peak of 16.8x income in 2007, before decreasing to 11x income in 2014.

In 2014 in Portugal, house prices stood at their lowest level since 2000: then they represented 11.2x income, compared with 9x income in 2014. And Germany has also experienced a similar trend – house prices there have decreased from representing 8.6x income to 7.2x income in 15 years.

The property sector in Spain has changed

The reality is that the housing market in Spain has changed (significantly), not only in terms of the decrease in the income requirement to pay for a home, but also in other aspects. The first is the decrease in the number of operations being closed each year: According to INE, 354,132 transactions were closed in 2015, which represents a similar level to 2011. However, that figure represents less than half the number recorded in 2007 (when 775,300 homes were sold).

Another aspect that has changed significantly is the size of the mortgages being granted. In absolute terms, they have decreased from almost €300,000 million in 2006 and 2007, to just over €41,000 million in 2014. On average, the size of mortgages granted has also plummeted, by 37%, to €106,655 in November 2015.

Original story: El Economista (by Inés Calderón)

Translation: Carmel Drake

Ministry Of Development: Housing Permits Reach 5-Year High

30 December 2015 – Expansión

The number of permits requested to construct new homes shot up by 29.2% during the first ten months of the year compared with the same period last year, to amount to 39,871 certificates, according to data from the Ministry of Development.

If the same rate of permit requests has been maintained during the last two months of the year, 2015 will come to an end as the second year of consecutive increases and with the highest volume in five years, since 2011, when the number of certificates reached almost 48,000.

Demand for permits to construct new homes thus maintained the growth trend that it had been recording for months and which allowed it to close 2014 with the first increase (in the number of permits) since 2006. Nevertheless, it still falls a long way short of the record figures reached before the crisis.

For the time being, during the first ten months of the year, 70% of the permits requested related to the construction of new blocks of flats, with 27,827 units and a cumulative YoY increase of 32.8%.

The other authorisations requested related to single family residences, with 12,028 requests, i.e. 21.6% more than during the same period a year earlier.

The number of permits requested to renovate and restore homes also increased between January and October, by 12.9%, to amount to 21,474 requests.

By contrast, the number of requests to expand homes decreased during this period, by 12.2%, from 1,318 during the first ten months of 2014, to reach 1,156 during the same period this year.

Original story: Expansión

Translation: Carmel Drake

House Prices Rise By 9% In Madrid In 1 Year

13 October 2015 – Expansión

Average house prices in Madrid amount to €2,937/m2, which represents an increase of 8.9% compared with a year before, according to a report published last week by the real estate consultancy Aguirre Newman. Despite this increase, house prices in the capital are still 37% lower than their peak in 2007 (€4,657/m2), the year the crisis started and the real estate bubble burst. The consultancy says that the current increases in house prices is being driven by growth in prime areas, given that prices have remained stable in all other areas.

The most expensive neighbourhoods for buying a house in the capital are: Almagro (Chamberí), El Viso (Chamartín), La Piovera (Hortaleza), Goya and Castellana (Salamanca) and Justicia (Centro), where property developments are currently being sold for prices of between €6,500/m2 and €7,000/m2. At the other end of the scale, the cheapest homes in Madrid are found in the districts of Villaverde, Villa de Vallecas and Carabanchel, with prices of between €1,600/m2 and €1,800/m2.

In terms of the municipalities closest to the capital, average house prices are highest in Pozuelo de Alarcón and Majadahonda, reaching up to €3,944/m2. The most economical municipalities are Móstoles and Pinto.

Average prices in Spain

By contrast, Tinsa published another study at the end of last week, which revealed that the price of (unsubsidised) homes decreased by 0.4% in September with respect to the same month last year, which confirms “the stabilising trend in terms of prices”, according to the Local Markets Index. The appraisal company indicated that this is the slowest rate of decrease since March 2008 (-0.3%), which marked the first YoY price fall in the series, which was launched in 2001. Average house prices in Spain have recorded a cumulative decrease of 41.9% since their height. By region, prices in the Balearic Islands and Canary Islands performed the best in September.

Original story: Expansión

Translation: Carmel Drake