Tag: peaks

Ministry of Development: Real Estate Activity is Non-Existent in 40+ Spanish Municipalities

21 April 2019 – El Confidencial

There is barely any real estate activity in more than 100 Spanish municipalities with more than 10,000 inhabitants. In 42, not a single building permit to construct a new home was issued in 2018. Not one. And in another 100, fewer than five permits were issued, whilst in 200, fewer than ten permits were issued.

That is according to data from the Ministry of Development, which reveals the extent of the disparity between the booming areas of Madrid, Barcelona, the Costa del Sol and the islands, amongst others, and the complete dearth of activity in other parts of the country.

Asturias and Murcia are the autonomous regions that are suffering the most where construction activity has been all but suspended. The driving factors are multiple, but a lack of demand is key. Moreover, even where there is buyer interest, there is not enough buildable land to develop, construction costs are high, financing is hard to come by and qualified labour is scarce.

Even at the national level, although 100,000 new home permits were issued last year, that figure is still eight times lower than it was in 2006, when 865,561 new build permits were awarded. And although the experts agree that a healthy market will never see a return to the pre-crisis figures, the volume of new home construction is still well below the 150,000-200,000 benchmark that property developers consider sustainable.

By contrast, in certain parts of the Community of Madrid, lots more building permits were granted last year than during the height of the boom, for example, in Tres Cantos (657 in 2018 compared with 6 in 2006) and Rivas Vaciamadrid (1,345 compared with 831 twelve years ago). There was also a lot of activity in Boadilla del Monte, San Sebastián de los Reyes and Alcobendas. Beyond the capital, more new build permits were granted last year than in 2006 in Pamplona, Lasarte and Santiago de Compostela, amongst others.

Original story: El Confidencial (by E. Sanz)

Translation/Summary: Carmel Drake

Anticipa: House Prices in Madrid & Barcelona Return to their Peaks of the Real Estate Boom

11 November 2018 – El Confidencial

The (real estate) recovery is really heating up. House prices in Madrid are on the verge of returning to their peaks of 2007. What seemed impossible, is now becoming a reality. That is according to a report from Anticipa Real Estate, which forecasts two-digit increases in house prices in the Spanish capital this year and next. Specifically, it predicts that homes will become more expensive by 10.2% in 2018 and by 11.5% in 2019, rises that are twice as high as the percentages that experts consider to be sustainable.

House prices have already been growing at rates of 10% during the last two quarters, according to the Repeated Sales House Price Index, prepared in accordance with the Case & Shiller methodology from the United States applied to Spain, which analyses repeat sales of the same homes. In other words, they are rising at double-digit percentages reminiscent of those recorded at the height of the real estate boom a decade ago.

Despite that, both property developers and banks are insisting that the market is very different to the one seen more than ten years ago and they categorically rule out that we are facing a similar situation to then. On the one hand, access to financing remains very restricted for solvent clients, whilst the recovery in prices is very uneven across the country. Whilst in the cities (and in certain neighbourhoods), prices are skyrocketing, in others, prices are still decreasing.

Although on average, by the end of 2019, house prices in Spain will be 15% below the peaks recorded in 2007, according to the report from Anticipa Real Estate, there are some hot spot areas where those prices have already been exceeded. In Cataluña, another of the hot spots in the Spanish market, increases of around 9% are expected next year and that despite the delicate political situation in Cataluña, which has had a direct negative impact on the real estate market – in Barcelona -, which, until a year ago, was performing extremely well in terms of transactions and prices.

Madrid stands out from the rest of Spain, with an evolution in terms of residential prices that has caused the first alarm bells to start sounding. In certain neighbourhoods, such as Chamartín, Chamberí and Salamanca, second-hand homes now cost the same as they did ten or twelve years ago, whilst in others such as Arganzuela, Centro, Moncloa and Tetúan, prices are close to exceeding those levels. In others, where prices are still well below their peaks of the bubble, the market is rising at rates of 20%, rapidly reducing the gap with respect to 2008.

They are peripheral areas of the city towards which price rises are moving like an oil slick. And that is because prices, both to the purchase and rental markets in the centre of the city have reached such prohibitive levels that much of the demand is moving en masse to more affordable areas, resulting in significant upward pressure on prices.

According to the latest data from Tinsa, in Vicálvaro, Ciudad Lineal and Villaverde, house prices have risen by more than 20% in the last year, compared with rises of 8.5% in Chamartín and 13% in the district of Salamanca. Meanwhile, the municipalities of Barcelona, such as L’Hospitalet de Llobregat, Castelldefels, Esplugues de Llobregat and Sabadell, are experiencing a similar phenonemon with increases of more than 15% (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Fotocasa: Rental Prices Reach Historical Peaks in 2018 in the Balearic Islands, Las Palmas, Salamanca, Barcelona & Madrid

3 July 2018 – El Economista

Rental prices in five Spanish provinces (the Balearic Islands, Las Palmas, Salamanca, Barcelona and Madrid) have reached their historical maximums in 2018, according to data provided by Fotocasa. The situation extends to nearby municipalities in the provincial capitals.

Barcelona, with a maximum price of €13.90/m2 in January 2018, is the province with the most expensive rental prices, following by Madrid, with an average of €12.36/m2, recorded in April this year. Those two provinces are followed by the Balearic Islands, with a price of €10.60/m2; Las Palmas (€7.65/m2); and Salamanca (€7.34/m2).

According to the Head of Research at Fotocasa, Beatriz Toribio, “the average price of rental housing in Spain has been growing uninterruptedly for three years, but in 2017, it did so at a very intense rate, above all in the large provincial capitals and in tourist destinations such as Madrid and Barcelona”.

Moreover, 65 other towns have also recorded their maximum prices at some point during 2018, in particular, those in the autonomous regions of Andalucía, the Community of Valencia, Madrid and Cataluña.

In this way, in Andalucía, 11 municipalities have recorded maximum prices in 2018, including Málaga, Torremolinos and Rincón de la Victoria. In the Community of Valencia, rental prices in 10 municipalities have reached their historical peaks, whilst in the Community of Madrid, 7 municipalities have seen maximum prices, such as Madrid capital, Las Rozas and Boadilla del Monte. Finally, in Cataluña, 9 municipalities have reached their maximum rental prices.

Original story: El Economista

Translation: Carmel Drake

Spain’s Most Expensive Homes are Located on c/Serrano & Paseo de Gràcia

1 March 2018 – Expansión

Two realities in the housing market / The recovery in prices with respect to 2008 is leaving disparate scenes. The gap between the most expensive area of Madrid, on Calle Serrano, and the most affordable district, San Cristóbal, amounts to 61 percentage points.

In the heart of Madrid, on Calle Serrano, a 90 m2 apartment costs around €857,700 (€9,530/m2) on average, 5% less than in 2008. Meanwhile, 16 kilometres south of the Golden Mile, in San Cristóbal, those same 90 m2 cost around €78,300 (€870/m2), 66% cheaper than during the years of the real estate boom. This situation is repeated right across the country, where, in many cases, the housing market is experiencing two realities in the same city. “The current housing market in Spain is certifying the recovery of house sales and reflects that there is still scope to acquire homes at much lower prices than 10 years ago”, said José María Basañez, President of TecniTasa.

Despite the high degree of activity in the sector at the moment, with increases of around 5%, it is not uncommon for people to buy a home now for less than it would have cost in 2008. In 2017, house prices were 35% below the peaks of the real estate boom, according to a Report about housing Maximums and Minimums prepared by the appraisal company TecniTasa. The situation changes as you approach the hot spots of the main capitals. The difference between the most expensive and most affordable areas of Madrid is 61 percentage points, of Barcelona is 38 points and of Sevilla is 54 points. The most affordable homes in the Andalucían capital are found in the areas of Amate/ Pino Montano/Macarena Norte and Bellavista (€990/m2), nevertheless, it is one of the few areas where prices are higher than they were a decade ago (up by 24%). It is followed by La Rambla de Pedro Lezcano in Telde (Las Palmas) where prices have risen by 9.7%; the centre of Orense (5.7%); Las Gándaras (Lugo), where prices have risen by 4.4%, and the historic centre of Toledo (1%).

The fact that the most luxurious homes are still 30% cheaper than they were in 2008, on average – on c/Serrano and Paseo de Gràcia, they exceed €9,000/m2 – and the most affordable homes are still 40% lower – in El Pilar de la Estación (Toledo) and Barrio Guinea (Castellón), they cost around €400/m2 – “is one element to take into consideration when making a purchase decision”, explain sources at the appraisal company.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Spain’s Housing Sector is Heading for Another Golden Cycle

6 February 2018 – Cinco Días

Ten years ago, the largest real estate bubble of the democracy was about to burst, and although it was not the first, it was by far the most spectacular:  not only were residential property prices extremely high, everything relating to property was excessive: the volume of homes built, the amount of credit granted and the number of sales recorded. And although there were those who warned that the bubble would burst and the consequences would be dire, no one guessed how dramatic they would actually be.

Now, a decade later and four years after the recovery began, the consensus amongst analysts is that we are starting a new golden cycle that shares almost no similarities with the one that burst in 2008. The most optimistic observers even forecast five years of stable and sustained increases in house prices, as well as an increase in house sales and in the construction of new properties boosted by the global economic recovery.

In terms of prices, the forecasts for 2018 range between a conservative 3% increase and an average of 6% for the whole country. Nevertheless, regardless of the figure projected for the country as a whole, all of the studies agree that house prices will rise at different speeds this year. Madrid, Barcelona (but not the rest of Cataluña) and the Balearic Islands will clearly perform better than the rest, with price increases in the double-digits. And although they will record their fifth consecutive year of rises, prices will still be around 27% below their former peaks, on average, according to Eduard Mendiluce, CEO of Anticipa Real Estate.

The forecasts for this year are not surprising if we take into account the latest figures for 2017, relating to the third quarter, which show an annual increase in house prices of 6.7% YoY (…).

In terms of the areas that will see the most activity, Victor Pérez Arias, Managing Director of the international real estate fund manager ASG Iberia, says that the Mediterranean Arc will continue to account for a great deal of activity, spurred on by the pull of overseas demand (..).

According to the CEO of Servihabitat, Julián Cabanillas, given that more than 470,000 homes were sold in 2017, the psychological barrier of 500,000 is going to be exceeded again this year, something that has not been seen since the fateful year of 2008.

One of the determining factors in the return of house purchases to positive rates was the reopening of the credit tap. Nevertheless, access to financing is still a long way from the free bar decreed at the beginning of the 2000s. The granting of a mortgage now requires certain solvency criteria, which forces future borrowers to have savings – and that requirement was avoided in the past on too many occasions. This prudence on the part of the banks is one of the keys that, according to the experts, differentiates this cycle from the previous one and distances the ghost of a new bubble.

In fact, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, says that whilst the volume of mortgages granted is considerably below the volume of purchases, the market will be healthy and that is what happened in 2017. With the official figures yet to be published, all indications are that around 470,000 house purchases were recorded in 2017, whilst the banks granted no more than 320,000 mortgages (…).

The previous crisis also hit property developers hard, given that demand was stopped in its tracks from 2008 onwards, following the outbreak of the global economic crisis, whereas just two years earlier, the number of new housing permits had set a new record, with more than 800,0000. Numerous companies had started projects without any presales, convinced that they would sell all of the units quickly. Given that it takes between 18 and 24 months to build a housing development, many buildings were finished only to spend years unoccupied. In this way, construction was suspended, above all, from 2009 onwards and even today, just 10% of the record volumes reached twelve years ago are being built.

Nevertheless, given that in the large cities and certain areas along the Mediterranean Coast, the absorption of stock has evolved at a good pace in recent times, for the experts, it seems that the time has come to increase the rate of construction once more. That is what the National Director of Residential and Land at CBRE, Samuel Población, thinks. He expects the supply of new homes to start to increase from the end of this year, although its impact will be greater in the second half of 2019. That consultancy firm is sure that despite this rise in supply, prices will not increase by less than 5-6%, with Madrid, Barcelona and a large part of the coast as the most dynamic markets (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

College of Registrars: House Prices & Sales Rise in Q3 2017

11 December 2017 – Registradores.org

According to the Real Estate Statistics from the College of Registrars, which took the temperature of the housing market in the third quarter of 2017, house prices continued to strengthen during the period. The House Price Index of Repeated Sales (IPVVR) increased by 2% with respect to the previous quarter, to record a cumulative YoY increase of 6.8%. Since its most recent minimum levels, recorded in 2014, the index has increased by 18.6%, which means that the reduction since the maximum prices of 2007, has moderated, to 22.4%.

Between July and September, more than 119,000 house sales were registered in the Property Registries, up by 15.6% compared to the same period in 2016. That volume of operations, like the level recorded in Q2, has not been seen since 2011 and exceeds the volumes recorded in certain quarters of 2010, 2009 and even 2008.

Over the last twelve months, 445,725 operations have been registered, the highest YoY figure for the last six and a half years, and representing a YoY increase of 13%.

The latest report from the Registry Statistics also shows an incipient change in the trend, given that new homes are also showing their first signs of recovery. In fact, they recorded the highest QoQ increase, of 4%, whilst the sale of second-hand homes decreased by 1%. Even so, second-hand sales still account for more than 80% of all operations.

The distribution of operations by autonomous region retained its typical structure, with Andalucía, Cataluña, the Community of Madrid and the Community of Valencia recording the most sales, whilst, by province, the list was led once again by Madrid, Barcelona, Alicante, Málaga and Valencia.

Purchases by foreigners

After more than a year with overseas demand exceeding 13% (of the total), the figure decreased slightly to account for 12.8% of all house purchases. In absolute terms, that means more than 15,300 operations per quarter and 59,200 per year are being closed by foreigners. According to the report from the Registry Statistics, “in a scenario of growth in the absolute number of house sales, it is normal that in percentage terms, foreign demand would tend to stabilise in the best of cases, and decrease slightly under normal conditions, without that meaning that interest from foreign citizens in house purchases in Spain is decreasing”.

By nationality, Brits maintained their traditional position of leadership, although with a slightly lower percentage than in Q2, followed by the French, Germans, Swedes, Belgians, Italians and Romanians.

The Balearic Islands, Canary Islands and Community of Valencia were again the regions with the highest foreign presence, in such a way that foreign citizens account for between one third and one quarter of all purchases in those regions. They are characterised by their high tourist appeal, primarily in terms of their “sun and beach tourism” offerings. The same thing happened in the classification by province, which were led by Tenerife, Alicante, the Balearic Islands, Málaga and Girona.

Original story: Registradores.org

Translation: Carmel Drake

Ministry of Development: House Prices Rose By 2.7% In Q3

23 November 2017 – ABC

The average price of private housing rose to €1,540/m2 during the third quarter of the year, up by 2.7% compared to the same period in 2016 and by 0.7% compared to the second quarter, according to data from the Ministry of Development.

This is the tenth consecutive quarter of annual house price increases in nominal terms. The increase of 2.7% is the highest since the start of the recovery. In real terms, after discounting inflation, private house prices rose by 1% in YoY terms in the third quarter. Prices have recovered by 5.8% since the minimums recorded during the third quarter of 2014.

Nevertheless, the average price in Q3 was still 26.7% below the maximum peaks reached during the first quarter of 2008.

House prices recorded twenty-six consecutive quarters of decreases in YoY terms from the end of 2008. In real terms, current prices are still 35.5% lower than the peaks of 2008.

The average price of social housing properties amounted to €1,130.80/m2 during the third quarter, up by 2% compared to the same period in 2016.

In QoQ terms, social housing prices fell by 0.3% compared to the second quarter.

Original story: ABC 

Translation: Carmel Drake

Anticipa Real Estate: House Sales Could Reach 526,000 In 2018

20 October 2017 – El País

House sales in Spain may reach 526,000 units in 2018, up by 9.3% with respect to the 481,000 operations that are expected to be closed in 2017 (which, in turn, represents 10.1% more than last year), provided financing conditions and the performance of the Spanish and Eurozone economies continue on course. Of that total, the bulk will be replacement homes (upgrades) and just 275,000 will involve the creation of new households. Moreover, the prices of new and second-hand homes will continue to rise with a growth rate of 5.8% during the fourth quarter of 2017 and of another 5% during 2018, although they will still be 23% lower than the peaks recorded in 2007.

Those are some of the findings of a report by Anticipa Real Estate, specialising in real estate management and loans, and belonging to the international fund Blackstone, about the housing market in Spain 2017-2019, which the firm’s CEO, Eduard Mendiluce, presented at the Barcelona Meeting Point conference, together with Josep Oliver, a professor from Universitat Autònoma de Barcelona (UAB), whose team compiled the research.

The increase that is forecast by the company with respect to the minimums recorded in 2013, when just 285,000 transactions were completed, will reach 85% by 2018. Nevertheless, according to Professor Oliver, the market volumes are still 42% below the peaks of 2006, when more than 900,000 private homes were sold.

Other figures that are below the maximums reached in the boom years are the number of finished homes (private and social housing properties) in Spain. The report sets a total of 63,400 units for 2019, compared to 62,900 units forecast for 2017. Although these figures represent a significant increase (more than 48%) with respect to the minimum recorded in 2016 (42,700 finished homes), the volume is 90% lower than the expansion peaks.

In terms of Cataluña, the research indicates that the number of private home sales should amount to around 82,000 during 2017 as a whole (up by 10.8% YoY) and 90,000 during 2018 (up by 9.8%). In terms of prices, they are forecast to increase by 6.9% in 2017 and by 6.1% in 2018. Given that the reduction in house prices was greater in Cataluña than across Spain as a whole (almost 45% compared to 37%), prices in 2018 are still expected to be 27% lower than those of 2007.

Original story: El País (by S.L.L)

Translation: Carmel Drake

Investment In Land Soars In Alicante & Valencia

18 October 2017 – El Mundo

It is nothing like the madness of the boom years, but the sale of land is resurging in Valencia and Alicante, in line with the recovery of the real estate sector. The prices being paid are still well below those of the boom years, but the market is shaking itself up nonetheless. There is still a lot of raw material on the balance sheets of the banks, which were forced to take on these illiquid assets from property developers following the outbreak of the crisis.

And it is those products that are gradually coming onto the market. Property is being reactivated and land is now needed again for construction, especially in the coastal areas, where it is starting to become scarce. The situation inland is another story, where there are enormous portfolios of land, waiting for projects that will take a long time to materialise, if they ever happen at all. There, demand for housing is much more limited than it is along the coast (…).

The latest figures from the Ministry of Development reflect this upturn in land transactions in the two provinces. During the first half of this year (the latest period for which data is available), 763 land operations were closed in Alicante and Valencia. During the same period in 2016, 634 sales were completed. In Valencia, for example, the number of transactions involving companies doubled during that period, from 80 operations to 158.

Meanwhile, in Alicante, where 375 land transactions were closed, activity returned to its level in 2008, just before the bubble burst. During the first half of that year, there were 340 operations involving the sale of land. During the second quarter of this year, 226 operations were closed in Alicante, a similar level to those seen during the era of the housing boom.

The surface area acquired through these operations also increased, up from 880,000 m2 of land purchased in Valencia and Alicante during the first half of 2016 to 1.6 million m2 during the same period this year. In other words, the volume of land bought and sold almost doubled.

The amount of money invested also soared during the first half of this year. In this way, investors injected €158 million into land in Valencia and Alicante during the six months to June 2017, up by 91% compared to the same period in 2016. If we look at the figures for the last twelve months, we see the spectacular growth of the market. Between July 2016 and June 2017, investment in land in the two provinces amounted to €277 million; whilst, during the 12 months immediately preceding that period, funds invested €173 million in land. In this way, investment rose by 60% between the two periods.

One of the factors that has allowed these investment levels to recover gradually is the decrease in the price of land, which seems to have bottomed out now, especially in the smallest municipalities where urban development pressure and demand for housing is lower (…).

The collapse of land prices, in general, catapulted operations, and the banks and Sareb were the star players, placing their best plots of land with local property developers that survived the crisis, as well as with large, new operators in the sector, which have now arrived in Alicante and Valencia, attracted by the pull of overseas demand and second homes for the domestic market (…).

According to the statistical series published by the Ministry of Development, urban land prices in Alicante peaked during the fourth quarter of 2006, at €528/m2, before dipping to their minimum level in the second quarter of 2014 (€100/m2). Now, land is being sold at around €134/m2 on average (19% cheaper than it was in June 2016). In Valencia, the current price is €145/m2 (down by 2.5% in YoY terms and compared to a peak of €391/m2 during the first quarter of 2007) (…).

One of the areas with the greatest real estate activity is the south of Alicante, specifically, the area around Orihuela Costa and Torrevieja, where almost all of the available urban land has now been sold, according to the latest report from Solvia Market View.

Original story: El Mundo (by F. D. G.)

Translation: Carmel Drake

Ministry Of Development: Finished Homes Rose By 39% In YTD July

17 October 2017 – El Mundo

Between January and July 2017, builders finished constructing 33,085 homes in Spain, which represents an increase of 39% with respect to the same period in 2016, according to data from the Ministry of Development.

In this way, the number of finished homes in Spain recorded a positive start to 2017, after registering nine consecutive years of decreases in 2016. From the peak of 2007 (641,419 homes), the figure had decreased by 94% by the end of 2016.

Of the total number of homes completed during the 7 months to July, 97.7% (32,312) were built by private property developers and 2.3% (7739 by public administrations. With respect to a year earlier, the construction of homes by property developers rose by 37.4%, and in the case of administrations, the figure more than doubled, from 318 to 773.

In the private sector, 20,043 of the homes were built by commercial companies, up by 46.3% YoY; 10,706 were constructed by individual people and communities of owners (+22.8% YoY) and 1,287 were built by cooperatives (81.8% YoY). Finally, 276 end-of-work permits corresponded to other types of private developers.

Meanwhile, the settlement value for the execution of construction work rose by 45% during the 7 months to July, to €4,381.1 million.

Original story: El Mundo

Translation: Carmel Drake