Fotocasa: Second-Hand House Prices Rose by 8.4% YoY in March

10 April 2019 – El Confidencial

According to data from the real estate portal Fotocasa, second-hand house prices rose by 8.4% in the year to March 2019, the largest increase since 2007. The average price of a second-hand home now amounts to €1,900/m2, a figure not seen since November 2012.

The data shows that YoY prices recorded 30 months of consecutive increases in March, although a rise of more than 5% has not been seen for 16 months.

The price rises were led by 3 autonomous regions, in particular, which experienced double-digit rises, namely: Madrid (19%), the Balearic Islands (12.5%) and the Canary Islands (11.8%), but prices rose in 16 of the 17 regions. Asturias was the only region to experience a price decrease, of -0.03%.

On average, house prices are still 35.6% below their peak, which was recorded in April 2007 (€2,952/m2).

In terms of average prices, Madrid (€2,976/m2), País Vasco (€2,810/m2) and the Balearic Islands (€2,617/m2) were the most expensive autonomous regions to buy a second-hand home in March. By contrast, Extremadura was the cheapest region (€1,108/m2), followed by Castilla-La Mancha (€1,141/m2), Murcia (€1,164/m2) and La Rioja (€1,402/m2).

By province, 43 of the 50 provinces recorded positive quarterly price variations and seven registered inter-annual price variations of more than 10%, specifically: Madrid (19%), Alicante (15.6%), the Balearic Islands (12.5%), Málaga (12.4%), Las Palmas (12.1%), Santa Cruz de Tenerife (11.4%) and Guadalajara (10.9%).

In Madrid Capital, 18 of the 21 districts saw price increases in March, led by Carabanchel (4%), Vicálvaro and Barajas (both 3.5%). Meanwhile, prices decreased in Chamartín (-3.3%), Latina and Usera (both -0.4%).

Meanwhile, in Barcelona, second-hand house prices rose in 5 of the 10 districts in March, led by Sants – Montjuïc (1.9%), Sarrià – Sant Gervasi (1.4%) and Gràcia (1.2%). The largest QoQ price decrease was recorded in Sant Martí (-1.1%).

Original story: El Confidencial (by E.S.)

Translation/Summary: Carmel Drake

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

Idealista: Rental Prices Rose by 13.2% in Málaga in 2017

11 June 2018 – Diario Sur

Do you live in Málaga for less than €700/month? Then, hold on tight to your home as if it were a treasure. These days, people who are coming to the end of their rental contracts or who are experiencing life changes that are forcing them to find homes in the city – whether it be a move for work, a separation or an emancipation from the family home – are coming up against a harsh reality: the high cost of rent, which has gotten worse to the extent that, today, homes coming onto the market have an average monthly rent of more than €1,000 in half of the neighbourhoods in the provincial capital. That is according to statistics based on the active adverts on the real estate portfolio Idealista, which calculates that rental prices increased by 13.2% over the last year, one of the highest rises recorded in all of Spain’s large cities. Over the last five years, the cumulative increase amounts to 38% and the price per square metre now amounts to €9.80, the highest of all of the Andalucían capitals.

The sharp rise in prices is the consequence of a significant imbalance between supply – which has decreased by 36% in three years, judging by the adverts on Idealista – and demand for rentals, which has increased by more than 120% over the same period. “What is happening in Málaga is what happened previously in Madrid and Barcelona: a genuine shortage of rental housing, especially in the Centre and Teatinos districts, which are the most sought-after areas”, says Carlos Rueda, spokesman for Idealista in the south of Spain, who knows real estate agents in those neighbourhoods who have waiting lists with more than 100 people on them.

Since Málaga has come late to this trend, its prices are now rising rapidly, whilst prices in the country’s two largest capitals are starting to enter a stabilisation phase, according to the Head of Research at Pisos.com, Ferrán Font. “In Barcelona and Madrid, there are areas where prices have stopped rising because price increases cannot be infinite in the rental market”, he added.

But in Málaga, that ceiling has not yet been reached. Inmaculada Vegas, Partner of the real estate agency specialising in rentals Rentacasa, summarises the situation as follows: “The supply has decreased significantly; almost no homes come onto the market. And those that do come on are very expensive. Many owners can’t help themselves: they see that their neighbour has let his home for €800 and so they raise their asking price to €900…the problem is that they find people to pay those prices”, she explains.

The perception of rising prices is even greater in the case of rentals governed by the old Urban Leasing Law, which are being updated now after five years. They are contracts that were signed at the height of the crisis (2013) and now they are being renewed in a radically different scenario. “In those cases, prices may rise by €300 or €400 overnight”, explains Carlos Rueda (…).

For Vegas, much of the blame for what is happening lies with tourist rentals: “Over the last two years, we have seen continuously how long-term rentals are being taken off the long-term rental market to be let by the day or by the week, above all in the Centre, but increasingly in the east of the city as well”, she says.

Rueda does not agree that the influence of holiday rentals has been that great. In his opinion, “since the crisis, Málaga has seen a huge explosion in demand for rental properties, not only from those who cannot afford to buy but also from those who want to live in rental homes” (…).

Original story: Diario Sur (by Nuria Triguero)

Translation: Carmel Drake

Venezuelans Lead Ranking of Most Active Foreign Residential Investors in Madrid

5 June 2018 – La Vanguardia

Venezuelan immigrants lead the ranking of home acquisitions by foreigners in the Spanish capital, according to data from Redpiso’s Research Service.

This data represents an increase of 10% with respect to the previous year and places investments by Venezuelan immigrants above those made by the Russians and Chinese, who were, until now, the nationalities that purchased the most homes.

The typical investor profile are people with a medium-high purchasing power, educated and employed, who have lived in the country for no more than three years.

Above all, they are buying homes in the areas of Chamartín, Hortaleza, Salamanca and Retiro.

The average cost per home amounts to around €565,000 and purchases are mainly happening in the second-hand housing market, “given that the supply of new build properties is very low and even more so in these areas”, said Redpiso.

In terms of the rental market, the average number of contracts increased by 35%, with the average spend on rent by Venezuelans amounting to €1,700 per month with three-year renewable contracts.

To explain the factors driving this growth, sources at Redpiso allude “to the mass arrival of Venezuelan immigrants who are coming to Spain due to the controversial socio-political situation in their country, as well as the limited and increasingly more expensive supply of rental homes in Madrid”.

Original story: La Vanguardia 

Translation: Carmel Drake

Ministry of Development Will Report Variations in Rental Prices Every Quarter

29 January 2018 – Eje Prime

The Government is taking an interest in the rental market. The Ministry of Development is planning to report on the evolution of rental housing each quarter with new statistics reflecting different data and aspects of the market.

The report will be compiled by the Ministry’s Observatory for Housing and Land, which will analyse the situation in the market, which is currently booming in Spain. The increase in prices in this segment in certain cities, such as Madrid and Barcelona, is coming close to setting new records, driven by the increasingly high demand for these types of assets. In 2017 alone, residential rental prices rose by 8.9% across the country, led by Cataluña, where rental house prices increased by more than 10%.

The team that is going to launch this new quarterly report is already working to compile the first edition, gathering information and forecasts on the rental market from the main bodies and public institutions, as well as from companies in the private sector.

Similarly, the Ministry of Development is going to publish research that will reveal citizens’ perceptions of rental housing in order to, according to the public body, “identify the main problems and barriers facing the segment”.

Currently, the Government of Spain has the Housing Plan for 2018-2021 on the table, pending approval by the Council of Ministers. With that, young people aged under 35 years will receive financial assistance of up to 50% to cover the cost of renting their homes, taking into account the salary level of the claimant and provided the cost of the rental contract does not exceed €900 per month.

Original story: Eje Prime

Translation: Carmel Drake

Kronos & King Street Buy Land in Madrid from Sareb

27 December 2017 – El Confidencial

The scarcity of land that is starting to be seen in cities such as Madrid and Barcelona, and the increase in property prices there, is forcing property developers to sign partnerships with international funds and expand their areas of operation outside of the large capitals, towards peripheral towns and dormitory cities.

One example of this growing trend is the recent deal signed by Kronos Homes, a high standing real estate company that has just joined forces with King Street to buy two important blocks of land from Sareb in the belt around Madrid. Specifically, they have acquired 128,000 m2 of land in Colmenar Viejo, a town located 30km to the north of the capital, where it plans to build 200 homes, according to a statement issued by the property developer.

Moreover, according to sources consulted by El Confidencial, it has also agreed to acquire 230,000 m2 of land in Torrejón, which is located 20km to the northeast of the capital. Both of these operations have been advised by Cuatrecasas and Almar Consulting.

Given their location, these acquisitions contrast with the steps that Kronos has taken in Madrid to date, where it has limited its activity to the centre of the capital. Moreover, they represent the first sales of land under management, for development over five or six years, that Sareb has made to a fund like King Street, according to the same sources.

A property developer born out of the recovery

Kronos Homes is a property developer created at the beginning of this real estate cycle to focus on exclusive homes, many of them accompanied by the stamp of famous architects such as Rafael de la Hoz and Joaquín Torres.

The latter has put his signature on the development of 82 homes that the property developer is currently building in the exclusive Madrilenian district of Puerta de Hierro, whose prices range between €488,000 and €1.4 million. Meanwhile, Kronos is working on a less elitist development in Cuatro Vientos, to the south of the capital, where it plans to build 2-, 3- and 4-bedroom homes.

With the acquisitions in Colmenar and Torrejón de Ardoz, Kronos is pushing ahead with its objective of acquiring a land portfolio for the construction of 4,500 homes over three years. Last March, the company said it already owned land worth €200 million, with capacity for the construction of 3,000 homes, and that it planned to invest another €100 million acquiring more plots.

Since it started operations in 2014, the company has closed several operations both with Sareb, as well as with financial institutions and has participated in the acquisition of non-performing loans backed by residential assets of interest.

Meanwhile, King Street is an international investment giant, which, in Spain, has been behind important debt operations, such as the one linked to Realia and the deal involving the radial highways. Currently, it is a shareholder of Neinor, in which it owns a 3.5% stake.

Original story: El Confidencial (by R. Ugalde & C. Hernanz)

Translation: Carmel Drake

Bank of Spain: Rental Yields Soar to 9.8%

7 December 2017 – Expansión

According to the Bank of Spain, buy-to-let homes yield a return from rental income of 4.2% p.a. If to that figure, we add the appreciation in value of the underlying property, the total return amounts to almost 10%, on average. That figure is similar to those recorded during the real estate boom.

Buying a home to put it up for rent offers a much higher return than those generated by other financial assets, such as debt and deposits. Moreover, house prices are still much lower than they were ten years ago and still have the potential to rise. These factors, combined with the gradual recovery in employment and the enormous demand for rental properties, have created a very fertile scenario for investors, both for individuals as well as for Socimis and funds. For this reason, the major indicator of the residential sector is no longer just price – although that is important – but instead yield.

Homes now generate an average annual return of 9.8%, according to the Bank of Spain, which takes into account not only the rental yield but also the appreciation in the property value over 12 months. In other words, the yield is now 1.6 percentage points higher than it was a year ago, to bring it in line with the figures seen at the end of 2007, at the peak of the real estate boom.

This rise in returns is due to the increase in house prices and the rental boom. Increasingly more buyers are opting to acquire homes as a business, in the hope that those properties appreciate in value and generate more than 4% in the rental market (the average is 4.2%).

According to the latest study from Fotocasa – which Expansión revealed last Saturday – 24% of the people who have participated in the residential property market in the last year are investors. That figure exceeds 30% in the large cities, above all in Valencia (44%), Barcelona (36%) and Madrid (35%), according to data from Tecnocasa and the Universitat Pompeu Fabra.

“Now is a good time to buy to let, both for the long-term as well as for second home properties, given that both formulae are generating returns that, in the current context of low interest rates, cannot be found in any financial products or on the stock market”, says Beatriz Toribio, Head of Research at Fotocasa (…).

What’s more, the appearance of new real estate business models has spurred profits along in the large cities, in such a way that 20% of investors now use their homes as tourist rental properties. That high percentage is due to the new short-term let platforms, such as Airbnb, which allow them to obtain even higher returns than from the traditional rental market.

Nevertheless, 65% of investors still prefer the stability of having a long-term tenant. The remaining 15% buy homes not to put them up for rent, but rather to wait for them to appreciate in value and to sell them at a profit.

Market leaders

Madrid and Barcelona are spearheading this new property fever. In the Spanish capital, buying a home to let it out generates a gross annual return of 11.8% (from rental income and capital gains); that figure amounts to no less than 23.1% in the Catalan capital, almost twice as much (…).

The central areas of Madrid and Barcelona are experiencing a genuine profitability boom. In the Catalan capital, the Sants-Montjuic district stands out, with a gross annual return of no less than 32.9% (5.3 points from rental income and 27.6 due to price rises). It is followed by Eixample (26.8%), Gràcia (25.9%), Sant Martí (25.6%), Horta-Guinardó (24.9%) and Nou Barris (21%, although the latter is the most profitable district excluding price rises: 6.6%), which all exceed 20%. The centre (Ciutat Vella) generates 19% and the exclusive district of Sarrià-Sant Gervasi yields 13.2%

In Madrid, the Centro district comes close to 20% (19.7%); it is followed by Salamanca (19.2%) and Chamberí (18.8%) (…).

Something similar is happening along the coast. The highest returns in the beach areas are located in the Balearic Islands, Barcelona, Las Palmas, Huelva and Almería, where rental yields exceed 5.5%, and overall yields exceed 10% if we include the capital gains. The high combined return along the Malaga coast (17.9%) is particularly noteworthy.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

The Perils Of The “Shared Flat Generation”

2 October 2017 – El Periódico

Sharing a flat is no longer the exclusive domain of students. First, the economic crisis and now, soaring rental prices, with Barcelona leading the way, are forcing more and more citizens to rent a room (rather than an entire home). According to the recent annual shared flat report from Idealista.com, demand for rooms for rent in Spain rose by 78.1% during the first six months of this year. The queues of the “shared flat generation” are continuing to grow.

The profile of people sharing flats has changed. “Traditionally, they were students, but now there are increasingly more qualified professionals”, says Beatriz Toribio, Head of Research at Fotocasa. Renting a home, not to mention buying one, falls outside of the economic reach of many citizens in the context of the exit from the crisis and the accelerated genesis of a new real estate bubble.

“There has been a change in mentality. Before the crisis, renting was not an option. But now it is the most flexible alternative in a changing world”, adds Toribio. In Spain, the average age of the “shared flat generation” is 29 years. They are young people, who essentially come from middle and middle-upper social classes, living in regional capitals and large cities. 81% of flat sharers are aged between 18 and 34 years and they tend to share with 2 people on average.

Such is the case, for example, of Nelson Bisbal (pictured above, left), a 31-year old engineer who lives in El Eixample, Barcelona. “I share a flat with two other people. Living by yourself is not feasible nowadays”, he says. Nelson and his flatmates pay just over €800 (per month) between the three of them. “If I had a flat to myself, I would have to give up other things. Very few of my friends live by themselves”. Nelson spends 25% of his salary on his monthly rental payments (…).

According to Sergio Nasarre, Professor of Civil Law and Director of the UNESCO Housing Project at the Universitat Rovira i Virgili (URV) (…), one of the parties responsible for this “cohousing” phenomenon are the tourist home platforms. “Airbnb, for example, has made it more profitable to rent a home to a foreign visitor than to a resident of the city. People now have no choice but to go and live in rooms rather than rent out entire homes”, he adds.

Although most of the people who share homes are in their 20s and 30s, there is also another reality: that of middle-aged people who are forced to share a home. Contributing factors include, to a large extent, the high level of unemployment and the loss of purchasing power as a result of price rises and salary decreases.

Black market rents

(…). Obtaining figures about how many people share homes is difficult given that many renters sublet rooms. According to the group of Technicians at the Ministry of Finance (Gestha), 41.4% of rents in Spain are black market arrangements (…).

Paying for a room, rather than for a flat, excludes tenants from the protections offered by the Urban Letting Law (LAU). Many people sublet so that they can afford to live or pay the rent, but many others do it to make a profit (…).

“During the real estate boom, a phenomenon emerged involving the overcrowding of homes with immigrants. They rented rooms in shifts”, says Nasarre. The situation in Barcelona at the moment (which is the city with the highest rental prices in Spain) is not unique; cities like Paris and London are suffering from even more extreme situations, he says.

This housing expert proposes, amongst other measures, administrative controls and the strengthening of tenants’ rights. He also opts for “decentralisation”. “All of the major universities, hospitals, are in Barcelona. Decentralising certain services would strengthen territorial cohesion”.

Original story: El Periódico (by Beatriz Pérez)

Translation: Carmel Drake

Engel & Völkers: House Prices Soar In Ibiza

21 July 2017 – Eje Prime

The real estate market in Ibiza is continuing to rise. Demand for high-end housing in Ibiza continues to significantly exceed the available supply, which has led to an increase in the prices registered on the island over the last year, according to a study prepared by the German real estate consultancy firm Engel & Völkers.

In its Ibiza Markets Report, the company explains that over the last year, it has sold homes to clients of 17 nationalities. Although most buyers on the island came from Germany, for the first time in almost ten years, Spaniards were the second largest group of house buyers.

The nationality of the other main house buyers included people from the United Kingdom, France, Switzerland, Italy and the Benelux countries. “Ibiza is still one of the favourite destinations for the international jet set and retains its leadership position in the Balearic Islands as the island with the most private flights”, say sources at the consultancy firm.

One of the most sought-after areas on the Balearic Island is the city of Ibiza and its surrounding areas. The redevelopment of the old town will be completed this year and so new luxury hotels will soon enhance the exclusivity of that area. In this sense, luxury villas measuring 350 m2 saw their prices increase by 14.2% in 2016 to reach €4 million.

Properties range from contemporary designer villas to traditional estates. The asking prices for villas measuring 350 m2 start at €3.5 million, whereby exceeding the figure of €3 million paid in 2015.

Entry prices for villas measuring around 350 m2 in very good locations rose to €2.6 million in 2016 compared to €2.5 million in 2015. “We are convinced that the growth of the real estate market will continue for the rest of the year in Ibiza”, predicted Florian Fischer, Director General of Engel & Völkers España.

The consultancy firm forecasts that the high level of demand will continue, both from domestic and international buyers, for primary and secondary residences on the Balearic Islands, primarily in the most premium segment, where the limited number of exclusive properties will lead to further price increases over the long term.

Original story: Eje Prime

Translation: Carmel Drake

House Prices Forecast To Rise By 5% In 2017

6 June 2017 – Expansión

Growth / The sharp fall in house prices during the crisis years, combined with the pent-up demand, the reactivation of mortgage lending and the recovery of the Spanish economy means that property developers, appraisal companies, real estate companies, funds and consultants alike are all predicting fresh rises in house prices this year. Nevertheless, the professionals stress that the growth in prices will vary by area, with Madrid and Barcelona leading the recovery.

In 2016, house prices rose by 4.7% in Spain on average, according to the National Institute of Statistics (INE). That growth rate was the highest since the burst of the real estate bubble, a decade ago. And the experts believe that that figure will not only be repeated in 2017, it will actually be bettered. “According to CBRE’s Trend Barometer which reflects the views of the 100 most senior directors in the real estate sector, one out of every two surveyed believe that house prices will grow by between 3% and 6% in 2017 at the national level, whereas only 21% shared that optimism in 2016. It is the first time since the start of the crisis that the experts are forecasting a general rise in house prices in Spain”, explained Adolfo Ramírez Escudero, President, CBRE Spain. (…).

According to the majority of the experts, the increase will amount to around 5% this year…(…).

Although all of the experts are optimistic about the overall trend in prices, several are quick to point out that this increase will vary by region. “The recovery in prices is proving selective and heterogeneous. Although prices are soaring in certain places, they have still not bottomed out in other markets”, said Pedro Soria, at Tinsa.

“Salaries have not risen to a level that makes us think that prices are going to soar, although there are some exceptions in specific areas of the large regional capitals where we have detected strong demand”, said David Martínez, CEO at Aedas Homes.

By area, Madrid and Barcelona account for the best forecasts in terms of price rises. (…).

Similarly, in addition to the two major cities, the positive outlook is starting to spread to new areas. “Prices are on the rise primarily in the major capitals and on the islands”, said Sandra Daza, at Gesvalt.

The improvements in the macroeconomic variables mean that the good feelings about the housing market this year are also expected to have an impact over the coming years. “House prices are going to continue to rise over the next few years. This year, we expect to see an average rise of around 5%, but the shortage of buildable land in those areas where demand exists means that we can expect to see higher rates of growth in the future”, said Javier de Oro, at Aliseda, the real estate arm of Banco Popular.

In this sense, and despite the price rises that have been seen in recent quarters, the experts point out that we are still a long way from the figures seen before the burst of the bubble. “We are entering a period of growth, which may last three or four years. It is true that there are cycles, but I don’t think that we’ll ever see the price decreases of the past again”, said Juan Antonio Gómez-Pintado, President of the property developer Vía Célere and of the sector organisations Asprima and APCE. (…).

Whilst in the case of new homes, the upward trend in prices seems clear, in the case of second-hand properties, a recovery is also being seen but at a slower pace. “So far this year, our real estate index has been registering very slight YoY decreases, of just a few tenths of a percentage point, which shows us that second-hand house prices in Spain are stabilising”, said Beatriz Toribio, Head of Research at Fotocasa. (…).

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake