ST Says New Homes Depreciated by 2.2% in 2014

6/01/2014 – Cinco Dias

Average new dwelling in Spain cheapened by 2,2% throughout 2014, thereby cutting in its 2013 value loss of 7.8% by five points, appraiser Sociedad de Tasacion reports. In its latest update, the firm remarks that over the last six months the prices dropped by only 0.4%, compared with the 1.8% registered in the first half.

Precisely, average price per square meter in provincial capitals showed 1.994 euros, meaning a cost of 179.400 euros for a 90-sqm home. New housing has suffered a 40.2% value loss since its hights.

In 2014, new property prices fell in all the Spanish regions, above all in La Rioja (down 3.7%), Aragon (3.5%), Asturias (3.1%) and Extremadura (3%). On the other hand, the smallest depression was observed in Navarre (down 1.2%), Castille and Leon (1.7%), the Canaries (1.7%), Galicia (1.8%), the Basque Country and Andalusia (down 2% in both).

When it comes to the most expensive capital city, San Sebastian once more tops the ranking with a price of 3.336 euros per square meter, followed by Barcelona (3.129 euros) and Madrid (2.663 euros).

In turn, the most economic new homes are found in Badajoz, Caceres, Ciudad Real and Murcia as they are asking for less than 1.200 euros for a square meter.

According to Sociedad de Tasacion, home-price slump has cooled down due to easier access to financing and better economic outlook for the industry.

Moreover, there has been a significant rise in bulk asset purchases by foreign investment group. Apparently, among the demand for under-5-year-old properties reverberates interest of private buyers.

What Should We Expect in 2015?

In the ‘2015 forecasts’ section, Sociedad de Tasacion predicts there will be a correction in housing supply started at end-2008 to align with the demand. ‘The weak recovery traces seen a year ago now become clearer and clearer’, the company assures.

As a result of a decrease in Spanish household wealth which will not be compensated by a 0% inflation, combined with the uncertainty lingering over the labor market, new home sales will be crippled.

On the other hand, Sociedad de Tasacion believes that new housing supply will remain considerable throughout 2015, in spite of slow production pace, whereas the demand will start to rise in line with an increase in number of quality jobs and financing.

“The trend of switching from selling to renting will continue to grow, both in case of lease-to-buy or just lease properties”, portends the appraisal firm.

 

Original story: Cinco Días (after EP)

Translation: AURA REE

Downgrade on Energy Efficiency Rating for 43% of Dwellings in Spain

5/01/2015 – Cinco Dias

A year and a half ago (June 2013), a legal requirement on carrying out an assessment of energy performance of existing buildings came into force. The goal was clear: establishing a reliable parameter for property comparison, essential at the moment of marketing a housing unit in Spain.

Undoubtedly, experts criticized this Energy Performance Certificate (EPC) regulation as according to them the mandatory evaluation would restrict to homes for sale and let and would not apply to all the buildings with no exception.

As the domestic energy assessors said, the nuance, together with short validity time and little public disclosure about the law made ‘citizens assimilate the implications of energy efficiency grades (ranging from A to G) and therefore its impact on property values is not perceivable yet’, explains Marta Garcia Hernandez, chief of Tinsa Certify.

The assessor, leading in the sector, has produced around 36.500 energy certificates during the year and a half, of which 35.000 corresponded to dwellings. The result is heartbreaking.

As much as 43.07% was classified as G, the worst grade of all, and 36.9% was given an E, third-to-worst. Only the three least efficient grades (i. e. E, F and G) represent 95% of the stock. Approaching the data from the other side, mere 1.29% of the evaluations were closed with one of the best grades (A, B or C).

Another discouraging fact is that the number of issued document makes a tiny part of the total. It is estimated that they represent an energy performance of 6% of the buildings and 2.5% of all dwellings. The subterfuge about the assessment prices should also fall under the adjustment hammer of the sector if citizens are expected to respect the requirement.

Poor classification, Greater Consumption & Higher Costs

Some autonomous communities of Spain have commenced to impose first sanctions on individuals and companies who had dodged the obligation. Fines oscillate between 1.200 and 6.000 euros.

Tinsa defends that many citizens are unconscious of the mandatory nature of the law as it has not been made public widely enough. Moreover, private owners do not know how much they could save on an energy-efficient home.

Tinsa elaborated a table specifying requirements to be met for each grade. As an example, the assessor takes an average Madrid dwelling which, if having an A-grade, should consume energy for 200 euros annually, and if it had a G-grade, the cost would soar to 2.500 euros per year.

Final grade shall have an influence on the property price, pulling it down in case of poor performance and adding to value when it is efficient.

 

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE

UBS Estimates Housing Prices Could Fall Another 8% In 2015

22/12/2014 – Bolsamanía

The sector’s size has shrunk from 12% to 4% of GDP

Housing price may not have reached rock bottom yet. According to a study commissioned by the Swiss bank UBS, the price adjustment in the housing market for 2015 may vary between 5% and 8%. The report states that the improvement will be “weak and unequal,” although it is detecting signs of recovery in the real estate market.

Housing market recovery – slight, slow and unequal

UBS considers the housing market recovery ‘‘slight, slow and unequal’’. In its report on the Spanish economy, cited by Idealista, the bank mentions that issued home building permits totalled less than 34,000, compared to 865,000 back in 2006.

It also points out that the number of dwellings currently being built had plummeted down to 37,000 units  back in 2013. It also highlights almost two million jobs have been lost in the sector and its relative importance has gone from making up 12.5% of GDP down to only 4% at present.

DIFFERING STATISTICS

UBS also points out the discrepancies between official public figures and estimates of private financial institutions. While official authorities speak of a 30% fall, the rest move it up to 40%.

Furthermore, the Swiss bank estimates the price adjustment process will go on throughout 2015. Moreover, it highlights that on average a price decline between 1% and 3% nationwide over the next period will turn up in data from real estate agents. The decline will be higher in official statistics which calculate that the average housing price decrease in Spain will fluctuate between 5% and 8% over the next year.

Original article: Bolsamanía 

Translation by Aura REE

Shopkeepers Fear the End of the Old Rental System

19/12/2014 – Bloomberg

Many shopkeepers which have been present in the most-visited streets of Madrid like Gran Via since always, fear the night of the New Year as with the twelfth stroke the new regulation introduced under dictatorship of General Francisco Franco will come down to history, causing a real stir on the CRE rental market.

The law is going to force the shops that are unable to pay new rents (raised from 5.000 to 12.000 euros monthly like in case of jazz club Café Central in Madrid) to shut down or relocate to cheaper premises, freeing up highly demanded retail space.

As Madrid-based director of high street properties for JLL, Angeles Perez, said, the move is a pure business as prime asset tenants paying market prices cannot operate next to others who pay almost nothing.

Spanish trade union UPTA said about 65,000 firms may be affected by the law and 190,000 people may lose their work positions.

Introduced in 1964 under the rule of Franco, the 1964 law was subsequently amended and extended in 1985 and later in 1994. This regulation aimed at providing social housing and affordable premises for the hunger-driven immigration flows into big cities.

Fair Rents

In 2015, the moratorium on retail rental contracts signed before 5th May 1985 will disappear. Insuring low rents, the law have not passed the time test.

Positive Impact

Many shop-owners fear they will not manage to pay the new amounts. However, the regulation may have a positive effect on prime assets in big cities by liberating utterly demanded retail units.

More spacious stores give jobs and attract tourists who then spend money in nearby bars and restaurants, boosting general economy, assured Perez.

As per data from JLL, Luis Vuitton and H&M have had considerable shares in the total of 330 million euros spent on retail space in high streets of Spain so far.

In the entirety of 204, total investment in hotels is likely to reach 450 million euros.

 

Original story: Bloomberg (by Sharon Smyth)

Summary: AURA REE

House Price Correction to Show 42% in 2015

16/12/2014 – El Economista

By the end of 2015, Spanish housing is expected to reach a 42% value drop-off counted since the 2007 peaks, portends property listing web site Pisos.com.

The projection matches other forecasts by the industry’s leading statistics providers like Tinsa which reports the average price of homes in Spain is currently settled on levels from before 10 years ago.

Another Decline of 8%

The adjustment in values have revived the real demand during 2014, and, as the web points out, prices will mark an 8% dip-down at the end of this year. However, 2015 is seen more optimistically.

‘After years of going through the floor, main indicators of the sector have started to steer upwards. Shy optimism reverberates in the 2015 forecasts as everybody wishes the poor numbers went out and balance returned to the market’.

Pre-Owned Homes

The real estate web site highlighted the existing properties as the main engine of the 2014 growth in the market. Trust in new housing is much lower, despite the fact that new building permits jumped for the first time since 2011.

During the third quarter, residential construction also showed the first quarterly rebound since the crisis broke.

 

Original story: El Economista

Translation: AURA REE

INE: Home Values Growing in Six Regions, Three Quarters in a Row

12/12/2014 – Expansion

Average housing prices registered over the third quarter of the year went up 0.3% in year-on-year terms. This is the second consecutive rise after six months of continous fall, reports Spanish Official Statistics Institute (or INE), experts’ most trusted source of information. From January to September, the increase was of 1.6% from the same period in 2013.

The slight price rebound noted down in the third quarter is by 5 basic points lower than the Q2 figures (0.8%), mostly due to decrease in pace of new housing value rising, which from a 1.9% rate went down to 0.8%.

What do the numbers say about the residential market? ‘The data starts to portray a stabilization trend and that this year’s market is painted in totally different colours than it was in 2013′, Angel Serrano, Business Director at Aguirre Newman, pointed out.

The resales market, the most reliable one if it comes to measuring the pulse of the residential sector, is also levelling out. Pre-owned house prices increased by 0.1% in the third quarter, one bps less than in the previous quarter. Research Director at pisos.com, Manuel Gandarias, explains it as follows: ‘Second-hand homes still are being more discounted than the new units. For greater supply, purchasers have a wide margin to haggle the prices down‘.

Dwellings became more expensive in six out of the seventeen autonomous communities of Spain. While Andalusia showed absolutely no change, in other ten regions prices fell further into the red. Madrid took the lead in increase ranking with 2.8%, followed by Cantabria (2%), Murcia (1.5%), Catalonia (1.1%), the Valencian Community (0.9%) and the Balearic Islands (0.5%). The autonomous cities of Ceuta and Melilla also set their home values higher, by 1.4% year-on-year.

On the other end we find Navarre where dwelling units cheapened by 6.9% from the last year, Extremadura (down 4.6%), La Rioja (3.5%), Castille-La Mancha (3.2%) and Castille and Leon (2.8%).

The data supports the hipothesis that recovery would come asimetrically. ‘In some provinces and regions we start to see new property developments, whereas in other the adjustment process seems to take much more time due to their housing surpluses’, said Angel Serrano, ‘but the 2015 market will go completely stable’.

Mr Gandarias warned that ‘the statistics should be taken with a pinch of salt’, as ‘basing on the horrible 2013 figures inevitably leads to finding improvement but the real positive numbers are still on the way’.

 

Original story: Expansión (by Juanma Lamet)

Translation: AURA REE

Where to Find Your Spanish Dream House?

12/12/2014 – Expansion

Countless opportunities have emerged in the real estate sector this year. After seven years of doom and gloom, deals in the market began to flourish. Housing sales jumped up by 13.7 per cent year-on-year in September and showed 27.024 transactions in total, reported the National Statistics Office of Spain (aka INE).

Logically, rock-bottom prices might have triggered the upsurge. According to the latest update by Tinsa Tasaciones Inmobiliarias, home values in the country dropped by 41.5 percent on average from the 2007 peaks. Slumps picture different in each region and ‘in some of them adjustment may be still pending’, Tinsa claimed.

Projections remark that prices will continue to fall in areas of a great surplus and no demand. ‘We predict that in 2015 correcting trend will prevail. In big city centers, home values seem to have stabilized and in prime areas some rebounds are expected’, said Dario Fernandez, Residential Head at JLL.

The market analysts agree that this is the right moment to buy a dwelling but it is advisable to study the situation in each region ahead. They also positively value private buy-to-lease deals. Average Spanish home (80 sqm at 1.450 euros each, at a rent of 542 euros monthly) returns 4% annually. The yield may reach 8% in line with property location and type, experts assure.

The Regions of Spain

Real estate market shows fresh traces of stabilization in metropolises like Madrid and Barcelona where huge bargains may soon fall short, above all in their centers and prime areas. In these cities, housing prices dipped by 2.2 percent from the last year, the least among other places in Spain. ‘Still, there exist some interesting opportunities in specific areas demonstrating economic growth potential and referring to pre-owned properties, but their prices are closer to reality’, points out Luis Leirado from TecniTasa.

Resales in Madrid and Barcelona became by 45 percent and 47 percent cheaper over the last eight years, informs portal fotocasa.es.

Vicenç Ramon, executive of RtV Grupo Inmobiliario, maintains the view and thinks the best deals are found in residential zones and mature neighbourhoods of both cities, where the economic level and demand are high, ensuring good, mid-term returns.

But to poach truly discounted properties, one should rush to the Mediterranean Coast, specialists encourage. Average depreciation of houses there in many cases crosses 50%. For example, in Valencia, there is an abundant supply with nice outlook due to tourist flows. The same conditions apply to some areas of Andalusia, above all to those located at the fringe of the coast.

Moreover, in these areas housing supply is usually represented by repossessed units at dramatically low prices which sometimes do not compensate for the cost of construction. In addition, lending terms and conditions are attractive, including 100% mortgages. However, experts warn that such a bargains are often situated far away from prime zones. Discounts applied by banks reach 60 percent.

Before You Buy

Analysts conclude that home buyers should take a selective approach and consider other factors before signing the contract. ‘A private purchaser should dispose of a saved amount equal to 20-35 percent of the final price, especially when it is not a REO unit, as banks usually finance 80 percent of their properties’ appraisal values. What is more, the buyer will have to bear additional costs which may be around 10-15 percent of the final price’, specialists remind.

Other Aspects

On the other hand, the investor must be up-to-date with taxation laws currently in force, as although the new amendment which will become valid in 2015 will affect mostly the vendors, purchasers may also feel its impact in shape of transaction costs. Marta Garcia, Product Manager at Tinsa, calls for paying a close attention to energy certificate of the home, which may range from A- to G-class. An average apartment usually has a B-class (second most-efficient), meaning expenses of 400 euros annually, while if the same dwelling had a G (the least efficient), it would generate a cost of 2.100 euros annually.

 

Original story: Expansión (by D. Esperanza)

Translation: AURA REE

Tinsa: Home Prices Will Hit the Bottom in 2015

11/12/2014 – Expansion

According to Spanish appraisal firm Tinsa, home values could bottom out during the next year, depending on the economic development and employment. Moreover, the company portends a considerable recovery for the industry in 2015.

Tinsa’s head of the Product and Diversification department Pedro Soria said that although the outlook for growth and employment are optimistic and since 2013 housing prices have been stabilizing, new jobs give lower salaries, they are usually temporal and part-time, resulting in poor buyers’ solvency and weak demand.

After floor-level year 2013 with sales reaching barely 300.000 properties, Tinsa estimates that an improvement in expectations observed since the beginning of 2014 will be translated to an increase of between 15 per cent and 20 per cent in terms of sold homes.

Referring to the stock and its absorption, the appraiser calculates it will show 340.000 dwelling units.

Mr Soria believes the volume may be digested significantly in 2017. However, this does not mean that a certain surplus located badly and demonstrating doubtful quality will disappear as well.

Also, Tinsa predicts that in 2015 there will be a notable reactivation in housing development, above all because the ongoing year has already seen positive numbers of new building permits.

Thus, 2014 may close with 40.000 permits but 2015 will probably double that, reaching 80.000, which will allow to avoid supply deficit in 2017.

In regard to the main players in the industry next year, Tinsa’s executive reckons the principal role will belong to the Socimis (Spanish REITs), vehicles that mostly target properties other than residential but this asset class also starts to appear in their strategies.

Foreign demand will continue to monopolize coastal areas and the islands. In fact, the litoral zones registering pricing stabilization or even first rises are dominated by international investors.

 

Original story: Expasión

Translation: AURA REE

Spain’s Home Prices Dipped by €105.000 On Average Since April 2007 Peak

9/12/2014 – Yahoo Finanzas

Since their bumper height in April 2007, pre-owned homes in Spain cheapened by 105.186 euros on average, reports real estate portal fotocasa.es. At that time, buying an 80-square meter dwelling meant a cost of 236.174 euros (2.952 euros a square meter), and in November 2014, pricing leveled out at 130.988 euros, down 44.5 per cent in seven years.

‘Better figures appearing in the Spanish property market are pulled up by second-hand housing, which tempts both foreigners and Spaniards  with rock-bottom prices‘, said the Research Head at fotocasa.es, Beatriz Toribio.

Speaking of deepest slumps, the region of Catalonia undeniably wins asking a mean of 145.232 euros less than seven years earlier. Precisely, the depreciation hit 47 per cent if compared to the price of 309.136 euros for an 80 sq m apartment of that time. Currently, such a unit averages over there at 163.904 euros.

On the other hand, Extremadura has barely changed its prices over the last seven years. Namely, a mean discount applied by home-sellers was of 56.440 euros. In March 2007, they were dictating 150.560 euros, whereas in November 2014 the same resale dwelling would cost 94.120 euros.

When it comes to November 2014 prices, the most expensive region to buy a home was the Basque Country, where a unit stood at 232.950 euros on average (2.912 euros a square meter). Since the February 2006 peaks, the value dropped by 33.7 per cent and post 351.360 euros on average.

The other end of the ranking is led by Castille-La Mancha, a region which asks 89.740 euros for an 80-m2, existing property. This region registers a staggering, 49.3 per cent depreciation since the average of 177.040 euros in March 2007.

 

Original story: Yahoo Finanzas

Translation: AURA REE

Get Ready For Flat Prices & More Building Sites

1/12/2014 – Cinco Dias

In this last month of 2014, the real estate sector of Spain already notes that this year has been much better than the previous one. All the evidence is that this was the last annus horribilis for Spanish housing, at least for the moment. Both prices and development activity suffered abrupt drop-offs, reflected in, for instance, data showing that from more than 860.000 dwellings started in 2006, only 34.200 were finished till 2013. Secondly, prices have contracted by 30.7% on average since the 2007/2008 peaks, official statistics point out.

And this is the average as in some municipalities depreciation reaches 50%. A slight improvement in employment and recent return of lending seem to be the key factors for ‘the sector’s stability‘. It is predicted that prices will go down ahead but not as sharply as they used to. Moreover, experts await more cranes in desirable areas where ‘reasonably priced’ homes would be welcomed. In spite all these positive signs, specialists agree Spanish housing won’t come back to mid-2000 levels… will it?

The Prices

Over the past months, various statistical sources were repeatedly reporting seemingly contradictory data. Some said houses cheapened, while others claimed there have been first rebounds in prices, first in  month-on-month and then in year-on-year comparisons.

However, all contained a grain of truth. The catch is that each of them employs different periodical information. The calculations coming from the notaries are not equivalent to studies from the registrars (who base on deal figures from 2-3 previous months). Similarly, pricing reports using appraisal data are not comparable to a real-market study involving visits to new building sites.

The proof that all of them are reliable is that all conclude pointing at the same trend, also showing that the free-market laws apply. Thus, they coincide in showing an increase in sales, earlier stock absorption, a slowdown in pricing slump and reapearance of cranes in new property developments.

The Wealth Effect

Let it be the Ministry of Public Works’ data or the Appraisal Association’s, two sources which have been providing reports on Spanish housing for at least the last 20 years, average accumulative decrease of house values in the country posts 30%, meaning the same level as in 2004. As Maria Romero from Analistas Financieros Internacionales (AFI) says, the figures mean a negative equity for those households which acquired a dwelling ever since.

Still, statistics also show that in some geographical areas prices started to rise. Will the trend expand? ‘High unemployment rates and insufficient income especially affect the first-home buyers, as well as prospective demand. In any case, we do not expect any additional, deep adjustments’, claims Mrs Romero. Experts from Sociedad de Tasación portend the prices will continue to go down until finding what they call ‘the balance point similar to end-2000’.

The Stock

At the beginning of this new cycle, prices and sales in in-demand areas level out, whereas in the zones where product is in excess, prices are being squeezed down and new development seems impossible in there.

The increase in transactions contributes to faster absorption of new homes for sale which shrank by one-third since the 2010 peak (700.000 units).

The New Property Development

At the moment, large cities’ centers, excellently located neighbourhoods and those with good infrastructure were the first to see return of house construction. They are very carefully selected projects with 100% sales guaranteed and attractive prices. It is demonstrated by the fact that building permits bounced back in September for the sixth consecutive month (up 31.6% year-on-year).

Logically, developers strike areas of high demand and income per capita which proves better financial ability of the buyers.

Experts forecast further rise in building permits’ number in the next months, triggering a phenomena unseen since the recession began – more homes will be started than finished. In fact, works completion certificates keep steering down (by 35.6% annually in the third quarter). To compare, last year only 4% was started of what was constructed throughout 2006.

The Financing

Like individuals, developers also started to receive the ‘approved’ seal on their loan applications. Thus, as the Bank of Spain reported, not only mortgage lending to eligible customers is returning but also loans to developers become more and more common.

What is more, value added to investment in housing again increased quarter-on-quarter by 1.3% in Q3.

Recent studies reveal that in all European countries where homes regained value also the GDP grew up. That means that better conjuncture is vital for housing sales to confirm a recovery, which in turn feeds up economical well-being: from more real estate transactions, through related industries (decoration, repairs, etc.), vivid activity, more jobs, increased confidence, and here we go again, more housing sales.

 

Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE