Sabadell To Release 800 New Homes Onto The Market

27 July 2015 – Expansión

The improved outlook regarding the performance of the Spanish economy is reflected in the real estate market, where prices are stabilising and even increasing in certain areas of Madrid and Barcelona. And the stocks of newly constructed homes are drying up in some towns, due to a lack of new developments in recent years.

Against this background, cranes are returning to the domestic landscape and banks are taking on a new role in the market for real estate development, as they aim to generate returns from the land and half-finished construction projects that they foreclosed in exchange for debt payments. And Sabadell is playing a very active role. It will release 800 homes onto the market over the coming months.

The bank led by Josep Oliu is currently developing eleven of its own real estate urbanisations, most of which are located in Barcelona, Andalucía and Levante, but also in País Vasco and Asturias. The construction work will be completed during the remainder of 2015 and 2016, and will culminate in the release of more than 400 homes – flats and houses – onto the market, over several stages, with some of the properties already being sold.

Beside these developments, which spread across the country and whose degree of completion ranges between 15% and 100%, three other new developments will be started after the summer in Madrid – in the towns of Colmenar Viejo and Alcalá de Henares – and Levante. Once finished, these urbanisations will contain approximately 400 homes.

During the first half of 2015, 46% of Sabadell’s property sales were made in cash, whilst 37% were financed by the bank and the remaining 17% were funded using loans from other entities. In fact, the Catalan bank is offering buyers both variable rate and fixed rate mortgages – at Euribor plus 1.6% and 2.9%, respectively.

The entity’s real estate and mortgage offer is in line with those of other banks such as Santander and BBVA, which are developing 600 different urbanisations at the moment, as well as with that of Sareb, which will release 1,200 homes onto the market during the remainder of 2015, in some of the 30 developments that it completed last year and the 42 that it currently has on-going.

Signs of recovery

After an intense and long-lasting period adjustment, both in terms of activity and prices following the burst of the real estate bubble, the sector is now showing clear signs of recovery, to the extent that foreign funds have also entered the sector for the development of homes. But, is there a risk of excess supply?

Residential development is likely to grow over the next few years, says Javier López Torres, the partner responsible for the real estate sector at KPMG in Spain. And there is still room for more new builds without any risk of a new real estate bubble, says an expert from Andbank, Rocío Ledesma. And Sabadell wants to maximise the opportunities in the market through its development company Solvia.

Solvia is dedicated not only to the development of urbanisations owned by the bank, it also works for third parties. It is a servicer with assets under management amounting to €28,000 million, and it offers services ranging from the management of loan portfolios, to the development of land, as well as the management and administration of assets. In fact, Sareb awarded its first asset management contract to Solvia.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake

BBVA: The RE Sector Begins Year Of Growth Supported By Positive Economic Forecasts

3 March 2015 – BBVA Research

Growth in housing sales in December raised transactions in 2014 to 364,600, 19% more than the year before. By the close of 2014, the price of housing had experienced its first quarter of growth since the beginning of the crisis, at the same time as housing starts (new builds) closed the year with positive figures. All in all, the economic growth outlook for this year and the favourable lending conditions are preparing the way for another increase in sales in 2015, which will be accompanied by a moderate price increase and further expansion in construction activity.

Original story: BBVA Research (by Félix Lores Juberías and Ignacio San Martín)

Edited by: 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

Bankinter: House Prices To Grow By 1.5% In 2015 And By 5% In 2016

18 February 2015 – El Mundo

Bankinter expects the volume of house sales to reach 450,000 by 2016.

The large ‘stock’ (in poor locations) will not prevent the recovery in construction.

GDP is forecast to grow by 2.2% in 2015, which will significantly boost the real estate market.

Demand for housing in Spain will increase again in 2015, with a 15% increase in the volume of transactions, which will drive up property prices by 1.5% on average and by a further 5% in 2016, according to the half-yearly report about the real estate market in Spain, prepared by Bankinter.

The financial institution states that, given the heterogeneity of the Spanish real estate market, prices in most provincial capitals and in the towns furthest from the large cities will remain stable and may even decrease slightly over the next few months. Meanwhile, in the most sought after areas (prime) of the main cities and in the best locations of tourist centres, prices will increase and may even grow by more than 3% in 2015 and by 5% in 2016.

Bankinter explained that this improvement in the outlook for the real estate sector is due to the economic recovery – GDP is forecast to grow by 2.2% this year – which will lead to a better climate for employment, increased confidence and greater access to finance. However, the financial institution warns that it does not expect the recovery of the sector to be fast or sufficiently profound to generate a return to the pre-crisis position, either in terms of transaction volumes or price increases.

The report states that unemployment will remain above 20% over the next two years; the financial effort required to make a purchase will continue to be high due to the decrease in disposable household wealth; the size of the Spanish population will decline (with the consequent negative knock-on effect on demand); and homes foreclosed by banks will continue to come onto the market with big discounts.

Recovery in new build sales

In terms of demand, the report expects an increase to 400,000 homes in 2015 and to 450,000 homes in 2016. A significant part of this growth will be driven by a recovery in the sale of new homes and by the maintenance of demand from foreigners. This increase will cause (new) house sales to break through the psychological barrier of 100,000 transactions in 2016.

In the case of supply, Bankinter points out that Spain still has a stock of between 650,000 and 700,000 empty homes, based on data published by the Ministry of Development and Sareb. Nevertheless, it considers that “this will not prevent the reactivation of the construction sector, given the mismatch between the location of the surplus (stock and demand)”.

In this sense, it warns that around 100,000 homes may never be sold unless huge discounts are applied to compensate for their challenging locations. Whereas, in the prime areas, there is a shortage of supply, according to the entity, which will be covered through renovations and new developments over the next few quarters.

Original story: El Mundo

Translation: Carmel Drake