Tag: property prices

Housing prices will drop another 10% in 2014, according to BBVA.

The managing director of BBVA, Ángel Cano, has estimated that the real fall of prices will reach around 35% at the end of this year and could reach 45% between this year and 2014, which would mean an additional cut of 10%. It has also communicated that the institution has gotten rid of more than 8600 properties until June. Therefore, Cano considers that from now on until the end of 2014 “we could see an additional fall” of prices. As explained by the executive of the financial institution, the descent of real estate prices is very “heterogeneous” depending on the regions and the geographical areas.

In the presentation of results of the first half of the year, Cano has defended the pace of sale of real estate assets carried out by the “blue bank”, while at the same time valuing the coverage rate of 44% in its exposure to this sector after the required provisions.

In the six first months of the year, BBVA was able to sell more than 8600 properties . 6600 of these assets have been directly commercialized by the institution. The rest, around 2000 units, are promotions included in the accounting books of the institution but owned by developers which were customers from the bank.

The managing director has assured that the institution continues to reduce its real estate risk and has added that the provisions are “fairly adjusted”, taking into account that the sales have been done on the accounting value.

On the sale of the nationalized institutions, Cano has explained that BBVA will analyze “and see all documents and information book” on CatalunyaBanc and NCG.

The bank will analyze the acquisition of these two institutions looking for the generation of value for the shareholder, while ruling out the sale of any strategic asset.

The managing director of BBVA has referred to the Turkish bank Garanti, valuing its “excellent” evolution in the last quarters and its “perfect” integration within the group.

 

Source: El Economista

The profit of rentals in Spain reaches 4,6% during the second quarter.

The acquisition of a property in Spain with the intention of renting it offered a gross profit of 4,6% during the second quarter of 2013, as informed by the website idealista.com.

According to the figures provided by the real estate website, the gross profit of a rented property in Madrid reached 4,2%, while this was of 4,1% in Barcelona.

Among the biggest cities in Spain, Seville is the one offering the best profit, with 4,4%, followed by Saragossa, with 4,3% and Valencia, with 4,2%. Bilbao and Valladolid are the least profitable big cities, with 3,9% and 4%, respectively.

From the rest of Spanish capitals, Lleida is the most profitable, with 6,2%. Las Palmas de Gran Canaria, Huesca, Alicante (4,7%, in all three cases) and Córdoba with 4,6%, follow. Cuenca, Badajoz and Huelva, with 4,5%, are behind.

The lowest profits can be found in A Coruña (3,1%), Ourense and San Sebastian (3,2%), followed by Lugo (3,3%) and Santander (3,4%).

“The prices of properties on sale and to rent are falling at different paces, while the selling price falls at a constant pace and everyone thinks it will continue falling, rentals are much more stable”, the chief of studies of idealista.com, Fernando Encinar, declares.

“It is true that the difficult access to credit is forcing many people to rent instead of buying, which is making the “buy for rent” more and more interesting, to negotiate the buying price of a property well in order to place it in the rental market”, Encinar concluded.

 

Source: Idealista

Housing prices reach the same level as ten years ago.

According to the information published by the Ministry of Infrastructure housing prices reached in June 1.481,7 Euros per square meter, figures which show a decrease of 7,8% in reference to the figures of 2012. But this downward tendency has been a reality in the last years, so that housing prices now reach level of 2003. In the first quarter of 2004, the average price per square meter reached 1456,2 Euros.

The price of the square meter accumulates a descent of 29,5% since its maximum level, reached in the first quarter of 2008, when prices were over 2000 Euros per square meter.

As for the tendency on the short term, most experts assume that prices will continue their moderation until 2014. Fotocasa.es calculates that currently owners are applying discounts of 25% on the initial offer in order to be able to sell their homes.

 

Source: Fotocasa

Housing prices drop by 10% in June and accumulate a descent of 37,8% since 2007.

The average housing price registered an annual descent of 10,6% in June, very similar to the previous month (-10,4%), accumulating a descent of 37,8% since the maximum level reached in December 2007, before the crisis, as informed this Tuesday by Tasaciones Inmobiliarias (Tinsa).

Housing prices have therefore continued their moderation after the disappearance, on the 1st of January, of the tax benefits for the acquisition of a property.

The metropolitan areas have experienced the greatest cut in June, with an annual descent of 12,7%, followed by capitals and great cities and the rest of municipalities, which registered a descent of 11,5% in reference to June 2012.

The municipalities of the Mediterranean coast, as well as the Balearic and Canary Islands, have also reduced their prices, only below the national average, with annual descents of 7,5% and 3,7%, respectively, thus continuing with the stabilization  observed in the markets in the last few months.

The accumulated cut in prices since December 2007 reaches 42,9% in the Mediterranean Coast, 41,4% in capitals and great cities, 40,6% in metropolitan areas, 33,2% in other municipalities and 28,2% in the Balearic and Canary Islands, according to Tinsa´s figures.

Source: Expansión

Prices of new homes accelerate their downfall this year.

Far from having reached their bottom, prices for new homes in Spain have speeded up their descent speed. In the first half of the year prices of new homes located in big and medium sized towns decreased by 5%, accumulating a descent of 27,6% since the beginning of the crisis. Without the effect of the inflation, the descent would reach 36,8%, according to the figures of the consulting company Sociedad de Tasación. This has been the most dramatic downfall of housing prices since the real estate bubble burst, in the second half of 2008, when it dropped 5,5%. The average price has reached 2102 Euros per square meter, similar to prices in 2004.

The descent of prices this year is against the opinion of real estate experts who declare that prices of the residential segment have reached their bottom and that Spain is preparing for the recovery. The report of Sociedad de Tasación is similar to the one issued by the consulting company RR de Acuña y Asociados, which advanced last week that prices would descent fifteen more years.

The figures of Sociedad de Tasación for new homes are referred to principal residences, of around 120 square meters and located in cities of more than 25.000 inhabitants. Should the report include second hand and secondary residences, subsidized properties, single family homes, big sized flats and all possible towns, then the descent of housing prices in Spain would reach 47%. The descent in this first half of the year for all Spanish properties reaches 17%.

The managing director of Sociedad de Tasación, Juan Fernández-Aceytuno, is cautious when it comes to predicting the future of prices in Spain: “we do not have a crystal ball and no one has one”, he declared yesterday. The executive described the current scenario of the real estate market, based on the ten factors that have an influence on housing prices. In reference to the demand, he indicated that the five main factors were: employment, lack of tax exemption, increase of VAT, the new rental law, and the negative balance in migration. The five factors which have an influence on the offer are: the available stock, the activity of Sareb and the real estate divisions of the financial institutions, the changes in the interest rates, the default rate and the lack of banking financing. “These ten factors will surely put downward pressure on prices”, he declared.

In his opinion, one of the most important dangers the sector is now facing is the possible future increase of mortgages if the Euribor rises, which is now at a minimum level of 0,5%. “The mortgages should be studied taking into account scenarios with higher interest rates”, he declared.

Source: Expansion

Housing prices accumulate a fall of 37% since 2007.

Housing prices accumulate a descent of 36,9% since the highest levels reached at the end of 2007, according to the figures published today by the Valuation Society. Between January and June 2007, the set-back was of 5%.

In this last year, housing prices have suffered a descent of 8%, 2,5 points higher than the one suffered in the same period of 2012. San Sebastián, (3484 Euros/m2) is again the capital with the most expensive square meter, leaving Barcelona (3259 Euros /m2) and Madrid (2805 Euros/m2) behind, while Badajoz is the cheapest city to buy a property (1183 Euros/m2).

Therefore, average prices for free properties in capitals reaches 2101 Euros/m2, which means 189.180 Euros for an average flat of 90 square meters. As for autonomous regions, all of them have registered descents in the first six months of 2013, with stronger descents in Extremadura (7,3%), La Rioja (6%) and Madrid (5,9%), while in Asturias and Murcia the descent in prices has been lower, 1,4% and 2,3%, respectively.

According to the Journal of the Market of New Properties, in the first semester of 2013 there has been no significant evolution in the absorption of the stock of new properties on sale, due to the difficult economic situation and the limitations on credit. The Society reminds that the volume of properties started and finished during the first quarter of 2013 has reached 6% in the first case and 50% in the second case, in reference to the same period in 2012, which means there has been a deceleration in the execution of construction sites when compared with the previous year.

The demand continues to show a very high retraction, which cannot be mitigated by the continuous reduction of prices, the Society adds. In its opinion, the difficulties in finding financing and the contradicting messages on the economic forecasts do not allow a favorable scenario for a reactivation in the short and medium terms.

Any possibility of reactivation depends on the speed of the current absorption, very uncertain due to the contraction of the demand, the maintenance of very high unemployment rates and the lack of trust of the population.

Source: Expansion

The price of properties will continue falling for the next 15 years.

(…) The Statistic Annual Directory of the Real Estate Market 2013, drafted by the consulting company RR de Acuña & Asociados, establishes that housing prices will continue falling for 13 or 15 years more. The conclusions of the report are, once again, in line with the apathy of the sector, devastating. Homes accumulate a depreciation of 30% since it reached it maximum level at the beginning of 2008, and now are facing a similar fall in the next five years. That is, properties will depreciate another 30% in the period 2013-2017, as advanced by Expansión on the 26th December 2012.

After three years of descent, housing prices will head for a zero or negative tendency at least during eight or ten years more, according to the report. (…)

Homes will therefore cost in 2017 half of what they cost in 2008. It is complicated to do any estimations after this date, but demand will continue to be feeble, according to the consulting company. (…)

The reference for Spain is Japan, with an inverted population pyramid, a slow growth for a long period of time and a long standing descent of housing prices. If the Japanese lost decade already lasts twenty years, the Spanish will take – regarding the real estate sector- more or less the same (from 2008 until 2027, at least)

According to RR de Acuña & Asociados, there are several motives to think this. First, globally there is a gap between the offer and the demand of 6,6 times. There is a stock in offer of 1,7 million of new and second hand homes, while net sales remained at 259.379 properties in 2012.

Also the net generation of households in 2012 was of 11.645 “and it is expected to be negative in the next few years”. Thirdly, globally and by regions the awaited evolution and tendency of the offer and the demand are divergent. “At least, during the next five years”, the report adds.

This situation of the demand opposite to an excessive offer “will pressure prices downwards, especially in all cases in which it is necessary to carry out the sale of the property, not only by the financial institutions, but also by individuals”.

RR de Acuña also considers that the price offered by sellers “is 50% higher than the price accepted by the demand”, in average.

There is another factor that favors a greater depreciation of homes: the end of the tax benefits. Once the tax exemption finished and the VAT was increased from 4% to 10%, buyers have ended up paying much more for their properties. Not only in the buying price, but also in the final amount paid, as the tax deduction also affected the payments of the mortgage. Both tax blows “are equivalent to the descent of prices between 2007 and 2012 in terms of financial effort (-27%)”, the report stresses. (…)

This scene might be encouraging for buyers with access to mortgages, but it is the perfect storm for real estate developers. “The structure of developers will disappear. In three or four years the developing sector will disappear”, Rodriguez y Rodriguez de Acuña stressed.

According to the consultant, healthy banks will be able to launch a policy of big discounts in order to get rid of the real estate ballast, but developers won´t, as they will not be able to sell below the production cost, while at the same time they will have to bear the financial effort of their refinanced debts. (…)

They will not be able to sell, nor will they be able to build. In most Spanish cities (90,2%), the average price of a property is below 120.000 Euros, amounts that do “not justify the construction”.

According to the report, 36% of the developers that existed in 2007 have closed. And 46% of the existing ones are bankrupt.

This is why developers will end up transferring 600.000 properties to the balance sheets of banks, which will force the financial sector to increase their provisions.

Regarding individuals, those which do not lose their homes will also suffer the collapse of prices, which will mean a patrimonial decrease and an effect of poverty. Also, in five years the value of any home acquired in the peak of the bubble (2007) will be below the mortgage of that property.

In the short and medium term it is “impossible that the sector may improve”.

Source: Expansion

Sareb finally lowers prices of properties in order to invigorate the Spanish real estate market.

The bad bank (Sareb) has had to admit that the market was not ready to pay the prices it was asking for its properties. In view of the worrying pace of sales since its creation and the possibility of having to carry out a capital extension, its president, Belén Romana, has decided to eliminate the surcharge of 25% on the transfer price that it was currently asking from the institutions that commercialize them, according to sources aware of the situation. It will therefore allow the prices to fall down to market levels, as long as these stay over the transfer price; that is, it will not sell at loss, which can invigorate the Spanish real estate market once and for all.

Initially, Romana´s team stressed their intention of getting the best possible price for the properties in order to attain the objective of generating a profitability of an annual 15% for its shareholders (the FROB and the main banks, except BBVA). That is the reason for this surcharge of 25% and for offering incentives to the transferring institutions for selling at even higher prices, as these are the ones commercializing them (Bankia, CatalunyaBanc, NovaGalicia, Banco Valencia, BMN, Liberbank, Ceiss and Caja3). Romana assumed that the big discounts applied to the transfer of properties (an average 65%, 54% of finished properties) would allow the market to absorb this surcharge. This policy made properties in the hands of Sareb more expensive than when they belonged to the corresponding savings bank.

Nevertheless, this policy has been a failure, with sales of only 550 properties since February, very far from the objective for 2013, established at 7528. The crisis is too deep and those prices were still too high for any person willing to buy. In fact, one of the sources assures that most sales are for properties between 50.000-60.000 Euros, that is, the cheapest ones. “You can apply very high margins, but if you do not sell anything, the margin is zero. It is better to lower the margins and sell, even though the profitability per unit might be low. At least you obtain a profit”, another source explains. That is the philosophy that will be applied by the bad bank from now on.

This surcharge of 25% also had the intention of “providing the managers at Sareb the tranquility that no one was going to accuse them of selling their assets at a loss if they obtained that margin”, according to a third source. The disappearance of the 25% eliminates that safety net and therefore Romana has taken two measures: to establish the transfer price as the limit for the descent of prices, that is, to ban the sale at a loss, and to ask for two market studies for each sale, one from the commercializing institution and another one from an independent company, in order to have the highest assurance possible that the price is the right one.

Real estate experts consulted by El Confidencial consider that this decision could provide the final drive to end the adjustment of the Spanish real estate market with a descent of prices to realistic levels, which banks have tried to avoid until now.(…)

The financing agreements signed by Sareb with some financial institutions so that these will award mortgages to those families that wish to buy homes from the bad bank will also contribute to this. The first of these agreements will be signed today with Banco Santander that launched last week the “Supermortgage Sareb-Santander” for first residences, up to 30 years, with a financing percentage of up to 80% of the valuation amount and at Euribor+2,25%.

(…) Precisely the shareholding banks – and competitors – of Sareb were the ones to oppose the collapse of the market and the fact that this would oblige them to lower the prices of their own properties. In fact, they tried to reduce as much as possible the discount applied in the transfer of from the nationalized institutions, and as it finally was rather high, they tried to counteract this with a higher minimum price. Also, the paralysis of the bad bank was allowing them to get rid of their own properties, which is their priority. Now they will have to assume that reduction of prices and that properties within Sareb start being sold.

(…) This turn of 180 degrees in the comercial policy of Sareb and the impact it will have on its margins might force it to revise its business plan in order to reduce its profitability targets to more realistic levels, although for the moment this matter has not been brought up. The waiver to its initial approach takes place just when the first institutional operation is at its peak, the so called project bull, valued at 220 million Euros. This operation has been criticized because Romana had nearly closed it  and decided to pull out in order to set out an auction and try to increase the price, which might turn the whole operation into a failure.

Source: El Confidencial

Tinsa: The price of homes drops by 10,4% in May and 37,4% since 2007.

The price of homes dropped by 10,4% in May, mainly in the capitals and big cities, according to the Index of Spanish Real Estate Markets, published today by Tinsa. The sector has been suffering a price adjustment for five years and the accumulated fall since the maximum level registered in December 2007 reaches 37,

As for the behavior by areas, the capital and greater cities suffered the biggest cut with an annual drop of 13,3%, followed by the metropolitan areas, with 13,2% and the towns at the Mediterranean coast, that suffered a descent of 8,5%.

The most moderate descents took place in the rest of municipalities not included in other divisions with a 7,2% followed by the Balearic and Canary Islands, that showed an annual descent of 5%, a tendency that shows the stability of prices in those markets. Starting from the highest value registered before the crisis, the greatest cuts took place in the Mediterranean coast in May, with an adjustment of 43,2%; followed by the capitals and great cities with 41,9%, the metropolitan areas with 40,3%, the rest of municipalities with 31,2% and the Balearic and Canary Islands with 27,9%.

Source: Expansión

Tinsa estimates that the price of properties dropped by 10,5% in April.

The properties in metropolitan areas were the ones with a higher descent, 13,7%, followed by the ones in the Mediterranean coast with a discount of 12,8% over the same month of the previous year.

Properties in capitals and great cities reduced their prices by 11,3% in April, while the ones located in other locations dropped by 11,7%.

Only the properties in the Canary and Balearic Islands experienced an increase of 3,3%, a figure that Tinsa interprets as a “current stabilizing”.

Since the highest level reached by prices, the accumulated fall in the Mediterranean coast reaches 45%, followed by capitals and great cities, with 40,4%; the metropolitan areas, with 40,2%; the rest of municipalities, a 33,1% and the Balearic and Canary Islands, with 24,5%.

Source: Expansión