Tag: real estate boom

Developers Focus on Spain’s Largest Cities as Smaller Towns Are Left Behind

8 November 2019 – The recovery of the Spanish property market since its nadir in 2013 has been relatively slow and concentrated in the country’s largest cities. In that year, developers applied for just 34,000 construction permits to begin work on the development of new homes. The year 2006 saw the last decade’s peak of a staggering 860,000. Last year, municipalities issued 100,351 new permits, when market sources state that Spain’s needs between 100,000 and 150,000 per year to keep up with demand.

The recovery, however, has been limited to the country’s largest urban centres. Major developers have so far largely ignored Spain’s smaller cities and towns, leaving any needed construction there for much smaller, local builders with limited financial capacity.

Last year, developers concentrated the majority of their investments (51.6%) in just five provinces: Madrid, Barcelona, ​​Malaga, Alicante and Bizkaia, which together account for just 36% of the country’s inhabitants. Ten provinces account for 65% of the homes built, while another 40, which account for 45% of the country’s total population, saw just 35% of the requests for new construction permits.

Original Story: Cinco Dias – Alfonso Simón Ruiz

Adaptation/Translation: Richard D. K. Turner

Spain’s Most Expensive Homes are Located on c/Serrano & Paseo de Gràcia

1 March 2018 – Expansión

Two realities in the housing market / The recovery in prices with respect to 2008 is leaving disparate scenes. The gap between the most expensive area of Madrid, on Calle Serrano, and the most affordable district, San Cristóbal, amounts to 61 percentage points.

In the heart of Madrid, on Calle Serrano, a 90 m2 apartment costs around €857,700 (€9,530/m2) on average, 5% less than in 2008. Meanwhile, 16 kilometres south of the Golden Mile, in San Cristóbal, those same 90 m2 cost around €78,300 (€870/m2), 66% cheaper than during the years of the real estate boom. This situation is repeated right across the country, where, in many cases, the housing market is experiencing two realities in the same city. “The current housing market in Spain is certifying the recovery of house sales and reflects that there is still scope to acquire homes at much lower prices than 10 years ago”, said José María Basañez, President of TecniTasa.

Despite the high degree of activity in the sector at the moment, with increases of around 5%, it is not uncommon for people to buy a home now for less than it would have cost in 2008. In 2017, house prices were 35% below the peaks of the real estate boom, according to a Report about housing Maximums and Minimums prepared by the appraisal company TecniTasa. The situation changes as you approach the hot spots of the main capitals. The difference between the most expensive and most affordable areas of Madrid is 61 percentage points, of Barcelona is 38 points and of Sevilla is 54 points. The most affordable homes in the Andalucían capital are found in the areas of Amate/ Pino Montano/Macarena Norte and Bellavista (€990/m2), nevertheless, it is one of the few areas where prices are higher than they were a decade ago (up by 24%). It is followed by La Rambla de Pedro Lezcano in Telde (Las Palmas) where prices have risen by 9.7%; the centre of Orense (5.7%); Las Gándaras (Lugo), where prices have risen by 4.4%, and the historic centre of Toledo (1%).

The fact that the most luxurious homes are still 30% cheaper than they were in 2008, on average – on c/Serrano and Paseo de Gràcia, they exceed €9,000/m2 – and the most affordable homes are still 40% lower – in El Pilar de la Estación (Toledo) and Barrio Guinea (Castellón), they cost around €400/m2 – “is one element to take into consideration when making a purchase decision”, explain sources at the appraisal company.

Original story: Expansión (by I. Benedito)

Translation: Carmel Drake

Spain’s Residential Sector: A Fleeting Boom Or A Genuine Bubble?

3 October 2017 – El Confidencial

A fleeting real estate boom or another bubble in the making? Although many in the real estate sector – property developers, banks, experts… –, deny that Spain is committing the errors of the past and are instead convinced that we are witnessing the creation of a new real estate boom, the truth is that some indicators have started to trigger the first alarm bells, in particular, those relating to the evolution of house prices. The increases in house prices are not only generalised, in certain markets, they are very striking.

Such is the case of large cities, like Madrid and Barcelona, where the increases – in new build and second-hand prices – are now well into the double digits. According to data from the appraisal company Tinsa, in just twelve months, house prices have risen by 20.6% in Barcelona and by 15.5% in Madrid. This means that during the summer months, there has been a real boom in prices since, during the second quarter of the year, the YoY rise amounted to just 1.8% and 2.7%, respectively.

“A sustainable increase in prices would range between 4% and 5%. The double-digit figures in certain areas, where there is limited supply or a tourist boom, such as Las Palmas and Ibiza, are sustainable over the long term”, explained Jesús Amador, Real Estate Analyst at Bankinter, speaking recently to El Confidencial.

Both cities are still well below their maximums of 2007 (Barcelona is 28.3% below and Madrid is 37.4%), nevertheless, since their minimums, prices have now appreciated by 44.4% and 24.9%, respectively (…).

Prices in Palma de Mallorca have returned to the peaks of 2007

The most notable finding in the second-hand market is the rise in house prices in Palma de Mallorca, which increased by 7.3% over the summer, making it the country’s first capital city to exceed the price levels of 2007, followed by Lleida (5.3%), according to data from Idealista. Increases in Málaga (5.2%), Girona (4.9%) and Pamplona (3.9%) are also noteworthy (…).

Five indicators of the health of the Spanish real estate market 

1.- Average sales period (liquidity)

In Spain, it takes 9.1 months on average to sell a home. The cities of Madrid and Barcelona are the most liquid markets, with average sales periods of 3.2 and 3.4 months, respectively. Of the five largest capital cities, Valencia and Sevilla have the longest periods, where it takes 8.7 and 6.4 months, respectively, to sell a home.

2.- Financial effort

On average, Spaniards spend 16.6% of their gross household income to pay the first year of a mortgage. The autonomous regions where below-average financial effort is required are La Rioja (13.2%), Murcia (13.3%) and Castilla y León (14.2%).

At the opposite end of the spectrum (…), a much higher percentage of the household income is required to buy a home with financing in the Balearic Islands (21.2), Andalucía (17.6%) and Cataluña (16.7%) (…).

3.- Average mortgage and monthly repayment

The average mortgage in Spain amounted to €113,130 during the second quarter of the year (the most recent data available), compared to €148,037 in 2007, according to data from Spain’s National Institute of Statistics (INE). The average monthly mortgage repayment amounted to €528 in Q2, almost 40% lower than ten years ago (…).

4.- Sales and purchases

The provinces of Málaga, Alicante and the Balearic Islands, which all have a clear tourist component, are those with the highest number of house sales in the last four quarters with respect to the size of their respective housing stocks: 33.3 homes for every 1,000 properties in the province of Málaga; 29.4 in Alicante and 28.8 in the Balearic Islands.

By contrast, the least active markets include Ourense, with barely 6.6 house sales for every 1,000 properties; and the provinces of Zamora and Teruel, with 9.4 and 9.5 homes sold, respectively, for every 1,000 properties.

5.- Permits for new builds

In terms of property developer activity, the provinces of Madrid, Navarra and Vizcaya are still the ones where the highest number of new build permits were registered over the last four quarters, in proportion to the size of the housing stock.

In the Community of Madrid, 5.4 permits were granted in the last year for every 1,000 homes already in existence, whereby exceeding the number granted in Navarra (4.4 permits) and Vizcaya (4.3 permits). The least active areas in this regard include the provinces of Tarragona and Lugo (0.7 permits for every thousand homes in both cases), followed by Valencia, Pontevedra and Zamora, where 1 permit was issued for every 1,000 homes.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Sabadell Lowers Its 20-Year Fixed Rate Mortgage To 2.90%

3 March 2015 – Expansión

Banco Sabadell has reaffirmed its commitment to fixed rate mortgages. The bank chaired by Josep Oliu has decided to convert its fixed rate mortgages into its star home loan product, and it will therefore recommend that its clients opt for fixed rate products to ensure the stability of their mortgage payments over the long-term. 16% of the bank’s new mortgages are now fixed rate, compared with 10% in 2014.

To demonstrate its commitment, Sabadell has just reduced the interest rate on its 20-year fixed rate mortgage from 3.7% to 2.90%. If the client prefers a 30-year term, a fixed rate of 3.10% will apply.

(…)

During the real estate boom, people paid rates of up to 4.75% when Euribor was at 4.1% in 2007.

(…)

Other entities, such as Bankinter, Bankia and BMN are also backing fixed rate mortgages, offering interest rates of between 3.4% and 4.60%. CaixaBank offers a rate of between 2.5% and 3%, depending on the degree of connection (of the client with the bank’s other products).

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake