Housing: 319,389 Homes Were Sold In 2014, Up By 2.2%

11 February 2015 – Expansión

After three years in decline, INE confirms that the residential sector is on the road to recovery. The greater increases in the number of transactions were recorded in the Balearic Islands (18.5%), Navarra (13.9%) and the Canary Islands (12%).

The National Institute of Statistics (el Instituto Nacional de Estadística or INE) confirmed yesterday that house sales have turned the corner around Cape Horn. The crisis is not behind us yet, by any means, but the sector has begun its long road to recovery, and that is the best news to come out of the property sector in over six years. Residential property transactions increased by 2.2% in 2014.

Last year, 319,389 homes were sold, compared with 312,600 in 2013 and 318,534 in 2012. This represented the first annual statistical increase since 2010, although that year was clearly affected by the termination of the tax relief for first home purchases for individuals earning more than €24,107, which caused numerous families to bring forward their house purchases so as not to miss out on the tax incentive of up to €1,350 per year.

“The year-end figure reflects a rise that, although timid, is a symptom of a significant change in the pace of operations. It is an encouraging piece of data that emphasises the stabilisation of the sector and it is based on the return of financial institutions to the field of finance and on the price adjustments undergone in the market”, said Manuel Gandarias, Head of Research at pisos.com.

In reality, 2014 was the first year since 2007 in which demand grew by itself, without tax incentives or other decisive policies. The worst years of the crisis for the property sector were 2008 and 2009, when residential sales decreased by -28.8% and -25.1%, respectively. In 2010, sales increased by 6.3%. The decline then slowed down gradually in 2011 (-18.1%), 2012 (-11.5%) and 2013 (-1.9%, when tax relief ended completely).

The expected upturn in purchases in due solely and exclusively to the strong sentiment in the second hand market, the real thermometer of the residential sector at a time when new homes are still somewhat mummified, in an over-inflated stock.

Sales of used homes increased to 199,943 in 2014, i.e. 18.4% more than a year earlier. Second hand homes now account for two out of every three transactions (62.6% of the total). These sales had increased by 3.8% in 2013.

Meanwhile, sales of new homes in 2014 amounted to 119,446 (down -6.9% with respect to 2013) and now accumulate four consecutive years of decline.

“This superiority of used homes over new builds is not only based on the larger volume and leeway afforded by the prices of such homes, it is also due to the scarcity of new developments and the effect caused when the banks dumped the new developments they held on their balance sheets, which effectively converted these properties into second hand homes for tax purposes”, said Gandarias.

The number of unsubsidised homes sold increased by 3.2% with respect to 2013, whilst the number of subsidised house sales decreased by 6.2%.

By autonomous region

The autonomous communities that experienced the greatest increases in the number of house sales in 2014 were the Balearic Islands (18.5%), Navarra (13.9%) and the Canary Islands (12%). The largest decreases were recorded in La Rioja (-25.1%), Castilla-La Mancha (-12.6%) and Murcia (-6.3%).

The regions that recorded the most transactions per 100,000 inhabitants in 2014 were Valencia (1,182), the Balearic Islands (1,043) and the Canary Islands (1,015).

83.0% of the sales recorded in 2014 related to urban properties and 17% to rural properties. In the case of urban properties, 55% corresponded to homes. Sales of rural properties increased by 7.3% and sales of urban properties rose by 0.9%. Within this second group, housing was the property type that experienced the highest growth.

The experts expect the improvement in house sales to extend into 2015. The 21st Edition of the Real Estate Heart Rate Monitor (la XXI edición del Pulsímetro Inmobiliario) published by the Institute of Business Practices (el Instituto de Práctica Empresarial or IPE) last week, forecasts that sales will grow by 7.5% this year.

According to the IPE, house prices will grow by 2.5% in 2015. In addition, mortgage lending will increase by 2.5% and the construction of new builds will grow by 7.5%.

Sales have already increased. Will prices rise too? We will know on 9 March, when INE publishes data abour the average house price at the end of 2014.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Housing In 2015: Some Vital Statistics

10 February 2015 – Expansión

For translation of the first part of this article, refer to: Housing In 2015: More Sales And Higher Prices

Vital statistics about the housing sector in 2015

House sales: +7.5%: House sales have returned to positive growth. After seven years of decreases, in which the end of tax reliefs barely affected the market – only in an artificial way – a real increase in the number of house sales was recorded in 2014 (up 2.6%). According to the Real Estate Heart Rate Monitor (Pulsímetro Inmobiliario) from the Institute of Business Practices (Instituto de Práctica Empresarial), 7.5% more sales will be closed in 2015 than last year.

House prices: +2.5%: The key indicator for buyers is price, which, combined with necessity, is the factor that tips the balance towards the purchase of a home or not. According to the Real Estate Heart Rate Monitor, prepared by the Institute of Business Practices, house prices rose by 6.47% last year and will increase by 2.5% in 2015. The average value of homes sold in 2014 was €141,718 and this year will close with an average price of €145,261, i.e. we will see a return to 2012 levels.

Construction: +7.5%: Timidly, slowly, the cranes will return to the skyline of Spain’s major cities. In 2014, the construction of new buildings began to increase. Specifically, 37,418 new builds were started in 2014, an increase of 20% on 2013. In 2015, the upwards trend will continue, but it will be less pronounced. According to the IPE, at least the first brick will be laid on 40,225 homes, i.e. 7.5% more than last year.

Mortgages granted: +2.53%: The number of urban buildings financed through mortgages will return to positive growth after no less than eight years in decline. This year, 306,639 loans will be signed for the purchase of property, i.e. 2.53% more than the 299,064 recorded in 2014. Last year, the total volume of mortgages amounted to €39,472 million, i.e. 13.8% more than in 2013. In 2015, the figure will increase to €41,840 million, i.e. 6% more.

Average mortgage: +3.4%: The average size of the loans granted by financial institutions to cover the purchase of residential property in 2014 was €131,984, i.e. 15.8% higher than in 2013. This year the figure will continue to rise, to reach €136,477, i.e. 3.38% more than last year. The average mortgage is equivalent to 93% of the average sales price of homes (note, we should remember that mortgages are granted for all kinds of real estate property).

Construction permits: +5%: Having seen the beginning – timid but evident – of the recovery in the real estate sector, professionals in the market are starting to glimpse a more promising future. And so, permits for the construction of residential developments will grow again in 2015, after eight consecutive years of marked decreases. This year 64,591 permits will be granted. That is 5% more than last year and 24,000 more than the number of new homes started.

All properties: +1.8%: The report from the Institute of Business Practice focuses on the residential market in particular, i.e. the housing market, but the real estate sector is more broad. If we consider all urban properties – shops, shopping centres, offices, housing – 717,471 properties will change hands in 2015, i.e. 1.8% more than in 2014, the year in which the increase was similar, boosted by the arrival of vulture funds looking to purchase bargain properties with high yields.

Housing stock: -29.1%: For the fourth consecutive year, the number of surplus homes decreased in 2014, from 777,000 in 2013 to 662,761. That is, 115,000 fewer homes or 14.7% of the total. In 2015, the decrease in empty properties will be even greater. According to the IPE’s forecasts, the figure will drop to 469,708 properties this year, i.e. 29.1% fewer (193,000 homes). Valencia, Castilla-La Mancha and Andalucía account for 54% of the total stock.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake