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

House Prices Will Rise Again In 2016

10 December 2015 – El Economista

Second-hand house prices are going to close 2015 with a YoY decrease of between 1% and 2%, according to pisos.com, which forecasts that they will grow again in 2016.

And next year will be a strong year not only for second-hand homes, but also for new builds, despite the tax advantages of the former compared with the latter.

“The evolution of prices highlights the improved pace of activity in the real estate sector, which has now left behind the large drops and promises to make a definitive comeback in 2016”, says the Director of Research at the real estate portfolio to which the CEO, Miguel Angel Alemany, adds that 2016 will be a “fantastic” year for developments to overturn the market.

“There is a significant amount of demand eyeing up the upcoming residential developments, something that supports sales off-plan, a phenomena that practically disappeared during the crisis”, adds Alemany, who predicts that “next year, the gap between these two types of operations will become narrower, thanks to the deliveries that will be formalised.

All of this is due to the fact that, in the background, there is a greater understanding between some very competitive financial institutions and a well-informed demand.

This understanding is expressed in the purchase and sale of homes that, according to the real estate portfolio, will continue along the same lines as in recent months, to finish the year with around 41,000 more operations than in 2014, which represents an increase of 11%, according to the registers held by the National Institute for Statistics (INE).

In the same way, mortgage lending will end the year with growth of 22%, i.e. around 46,000 more loans, according to the forecasts set out by pisos.com.

Change of buyer, change of market

Thus, the buyers and the financial institutions have changed and they are showing different attitudes as we emerge from the crisis. The former are leaving behind opportunistic purchases, based on pure investment criteria, with the value in use of homes gaining weight.

“Buyers are no longer looking for bargains that allow them to live off the rental income, but rather they are looking for homes according to their own needs”, says Alemany, who immediately adds that owners “have come to their senses” and now “wise clients are those who wait to build up their savings and avoid the requirement for guarantors”. Meanwhile, the banks now appreciate customers who come to their branches with their accounts already prepared.

Cautiously looking ahead to the future

Thus, at the real estate portal, they consider that “sustainable growth in the residential sector doesn’t seem so difficult to achieve any more”. Nevertheless, they urge buyers to be “cautious” given that long-term volatility in variable interest rates may lead to nasty surprises in the future for those individuals who are now taking our mortgages now whilst Euribor is at historical lows.

Moreover, pisos.com points out that “any political decisions that are taken after the general election affecting the housing market must be coherent, considered and responsible”.

Original story: El Economista

Translation: Carmel Drake

INE: País Vasco & Aragón Led Rise In House Sales In June

7 August 2015 – Expansión

Recovery / The real estate sector consolidated its recovery in June, thanks to the second hand market. The Páis Vasco and Aragón were the regions that saw the highest increases in the number of house sales.

“If the current trend continues, 2015 will be the year that marks the before and after in the real estate sector”. The residential market is continuing to build on its stabilising trend, after seven years in decline.

Yesterday, the National Institute of Statistics (INE) confirmed that: house sales soared by 17% in June to record ten consecutive months of increases. According to Manuel Gandarias, Research Director at pisos.com, if the trend continues, 2015 will signal the start of the recovery in the sector.

This increase, which is the largest since March 2014, is due to strong growth in the sales of second hand homes (27,947 transactions), which shot up by 44.5% YoY. By contrast, the sale of new homes (6,631) plummeted by 30.6% compared with the same month last year.

Experts say that the second hand market, which accounts for 80% of all sales, is the true barometer of the current health of the sector. They also explain that the data recorded in June relates to transactions signed in April and the beginning of May.

Thanks to this surge in the sale of second hand homes, increases have been observed across the whole of Spain, except for in Galicia, where sales decreased by 6.5%. The greatest increases were recorded in the País Vasco (40.5%), Aragón (35.3%) and the Canary Islands (31.8%), although the region with the highest number of sales per 100,000 inhabitants was Castilla y León (718), followed by Aragón (639) and La Rioja (605). At the other end of the spectrum, Asturias and Galicia were the regions with the least activity, recording just 46 sales each per 100,000 inhabitants, followed by Castilla-La Mancha, with 53. In absolute terms, Andalucía led the market, recording 6,129 transactions in total, up by 13.9% from a year earlier.

Positive climate

Real estate experts believe that the positive sentiment in the residential market has now taken root and that the end of the crisis is near. (…).

According to Gandarias, “the granting of mortgages, which is fundamental for the increase in house sales, is flowing better than expected. Households have become less indebted and now have more (disposable) income”. In fact, according to INE, the signing of mortgages to purchase homes increased by 10.9% in May and has now recorded a whole year of consecutive increases. Moreover, residential prices increased by 1.8% in 2014 and by 1.5% during Q1 2015.

In monthly terms, house sales grew by 3.8%, the first increase in the month of June since the start of the crisis. Almost 90% of transactions related to unsubsidised homes, which increased by 16.4% (27,493 transactions). Sales of social housing properties grew by 22.8% (3,085).

Original story: Expansión (by Juanma Lamet) 

Translation: Carmel Drake

INE: Mortgages Increased By 1.6% In 2014

27 February 2015 – Expansión

The number of mortgages granted for homes increased by 1.6% in 2014 with respect to the previous year, to 202,954, which meant that the mortgage market returned to positive growth after seven consecutive years of decreases; and so a change in the sector’s cycle begins.

The signing of new mortgages for the purchase of homes rose by 1.6% in 2014 to reach 202,954, the first increase after seven years of decline, according to extracts from the Mortgage Statistics published by INE today.

The number of new mortgages had not increased on a year-on-year basis since 2007, a year in which more than a million more mortgage contracts than last year were signed – 1,238,890, to be exact – therefore, despite the recovery that appears to taking place in the sector, the market is still well below its pre-crisis figures.

The signing of mortgages has fallen steadily since 2007: in 2013, the number decreased by 27.1%, whilst in 2012, 2011 and 2008, they fell by more than 32%. In 2009, they dropped by 22.2% and in 2010 and 2007, the declines were more moderate, with decreases of 6.6% and 7.7%, respectively.

Last year the size of the average mortgage taken out over homes also grew, by 2.1% to €102,130, whilst the total amount of capital loaned rose by 3.8% during the course of the year to reach €20,727 million.

In December 2014 alone, the number of new mortgages recorded in the property register grew by 28.9%, compared with the same month in 2013, whereby completing seven consecutive months of increases. During the last month of the year, 15,962 contracts were signed in total, for an average value of €124,059, also higher than a year earlier.

Overall, in 2014, the total number of mortgaged properties increased by 11.7%, to amount to 314,018. Of those, 22,342 were urban (+12.5%) and 1,054 were rural (-3.2%).

For Fernando Encinar, Head of Research at Idealista, “this increase in the number of mortgages granted represents good news for the sector. Banks have started to hang the “mortgage” sign in their branches once again and demand is beginning to respond, encouraged by the economic recovery and the suppression of prices”.

Manuel Gandarias, Director of the Research Unit at pisos.com offered a similar view: “Everything seems to indicate that the mortgage market will reactivate briskly. Following the significant decreases observed since 2007, the data in 2014 represents the first annual increase in the granting of loans, and the second half of the year really stood out in terms of growth”.

“Similarly, the average size of mortgages has experienced an increase, which is indicative that the banks have recovered the financing role that the sector was has been asking for”, he continued.

“Competitiveness between entities to win the best clients has returned to the mortgage sphere and offers will continue to attract sales and purchases. Everyone will have to pay attention to the evolution of Euribor and the movements of the European Central Bank (ECB), whose measures have accelerated this opportunity. Although the future looks brighter, we should remember that this is the principle of stabilisation. Financing is a fundamental element for families and it is a clear indicator of the process of improvement.

Andalucía, Madrid and Cataluña lead the increases

As usual, the autonomous regions with the highest volumes of mortgages granted in 2014 were Andalucía (36,860), Madrid (35,461) and Cataluña (30,261).

The regions in which the most capital was lent to constitute mortgages were Madrid (€5,134.9 million), Cataluña (€3,439.1 million) and Andalucía (€3,219.0 million).

Original story: Expansión

Translation: Carmel Drake

Second-hand Housing Is More Appealing To Buyers

23 February 2015 – El País

62% of the homes purchased in Spain last year were second-hand.

The second-hand segment is winning by a landslide in the race to sell more homes in the Spanish real estate sector. Overall, sales increased in 2014 for the first time in four years – breaking the trend observed since 2010 – and they did so thanks to the used home segment.

62.7% (200,065) of the 318,928 homes sold in 2014 were second-hand and just 37.2% (118,863) were new builds, according to the statistics of the Association of Registrars. According to INE, sales of second-hand homes increased by 18.4%. By contrast, sales of new builds plummeted, falling by 16.9%.

All indicators suggest that second-hand homes will continue to dominate transactions throughout 2015. Thus, the gap between new and used housing will become increasingly larger. Why? The main factor tipping the balance is price; second-home homes are more affordable for the long-suffering buyer. Used homes are between 5% and 15% cheaper, according to Manueal Gandarias, Director of the Research Unit at pisos.com. In euros, “the difference between an average used home and an average new build in Spain amounts to approximately €400 per square metre”, according to calculations by the appraisal firm Tinsa.

Second-hand properties ended the year with an average price of €1,347 per square metre, whereas new builds stood at €1,624/m2, according to data published by the General Council of Notaries. Moreover, second hand properties are available for as little as “just over €1,021. This undoubtedly encourages future buyers”, says Chus de Miguel, Commercial Director at Casaktua.com.

Furthermore, the prices of used homes offer more room for negotiation when they are in private hands, especially for overvalued homes acquired during the bonanza years.

Another point in favour of second-hand properties is that they are taxed at a lower rate. Brand new properties are subject to a 10% VAT charge, whereas Property Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP) is levied on those that are already inhabited and it varies from 6% to 10%. Moreover, aside from a few exceptions, used homes are located in better areas, since new homes are often scarce in city centres, unless they are refurbished homes. “A high percentage of used homes are located in more established, central areas that have more services”, says Chus de Miguel.

Although new builds have a very important advantage: “the greater ease of financing offered by the developers and banks that own these homes”, says Jesús Duque, Vice President of Alfa Inmobiliaria. Loans are normally granted to the developer in the case of new builds, which may be subrogated to the potential buyer. And financial institutions offer more credit facilities to place their own products, be they new or used. The individual vendor is disadvantaged in this sense.

In terms of the state of the property, new homes are ready to move into and live in, whereas used homes may require the buyer to invest in a face-lift or comprehensive renovation. “Our clients prefer to buy a house in a good building, update it or renovate it to their taste and pay 20% less than they would pay for a new build”, says Fernando Sánchez, agent at Re/Max Urbe. And he continues “problems should not arise if the property has a favourable Technical Building Inspection (report), is energy efficient and has good insulation”.

Regardless of tastes, is it worth paying more for a brand new home? “If we are talking about the same area and similar characteristics in terms of a property, I do not think it is worth paying 10% or 20% more for a new home”, says Duque.

Before signing any agreements, experts advise that (potential buyers) perform a simulation of the annual costs that will result from the purchase. As well as of the monthly costs. One should appreciate that “new builds typically charge higher community fees (to cover the cost of swimming pools, gardens, sports facilities…) and that it is possible to find second-hand homes where the central heating and water costs are included”, say sources at Fotocasa.es.

The fact that the second-hand segment is driving the reactivation of the real estate market is also explained by the fact that there is more supply. And “because the new builds sold by banks are also classified as second-hand”, say experts at Idealista.com. Much of the stock held by banks is classified as ‘used’ even though it is actually brand new, because they are homes that they have absorbed from developers in exchange for the payment of debt.

And whilst the second-hand market is growing, the new build segment is contracting; it is plummeting because hardly any new homes have been constructed in Spain in recent years. It is true that the construction of new homes is now increasing, albeit at a very slow rate. By 2016, the panorama will have changed. Bankinter estimates that, after years of significant decreases, driven by low demand and developer paralysis, sales of new builds will return to a level close to 100,000 units by 2016 (with total sales amounting to 450,000).

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake