RE Recovery Causes Spike In Permits For VPO Home Sales In Madrid

16 October 2017 – Cinco Días

The recovery of the real estate market is consolidating to reach every segment and type of home; and social housing properties (VPO) are no exception. In the statistics published by Spain’s National Institute of Statistics (INE) each month, we can see that VPO properties account for between 7% and 9% of all transactions. That figure is higher in the Community of Madrid, given that the authorities in that region are seeing that the number of permits to sell these kinds of homes, which are subject to a specific legal framework, are soaring.

Since social housing properties are allocated to families with fewer resources, they have always been associated with lower prices, when such families do not receive any additional help, and moderate prices, when the families also receive direct subsidies, plus the possibility of financing them with so-called subsidised loans, those that accrue interest at a lower rate than charged in the free market.

For this reason, and to avoid owners from speculating with homes that are made available to them thanks to public funds, the law offers two options to anyone wanting to sell a VPO home.

The first requires the owner to request permission to sell the home, but, in that case, the maximum price is assigned by the regional authorities, on the basis of the size of the home and its location (…).

In Madrid, during the boom years, the price difference between a private home and a VPO property reached 30% on average. Nevertheless, the burst of the bubble caused that difference to reduce, to the point that in some neighbourhoods of the capital and in several towns in the region, the prices of private and social housing homes ended up being the same (…).

That price difference is key for choosing the second option in the event of a sale. If an owner considers that he can sell his VPO home at a significantly higher price than the level set by the autonomous government, then he can request that his home be disqualified. The process is not easy, owners need to follow several procedures, which are somewhat tedious, but the advantage is that if all the requirements are fulfilled, then the Administration grants the disqualification without any problem.

The price rises in Madrid, one of the regions where houses are appreciating by the most, is encouraging both those who want to sell their VPO homes at an appraisal price, as well as those who prefer to do so without any obstacles in the free market (…).

In this context, sources at the Ministry of Transport, Infrastructure and Housing in Madrid have seen how permits to sell VPO homes have soared by 30% in the last two years and how the number of requests to disqualify homes has increased by 21% (…).

Finally, according to José María García, the Director-General for Housing in the Community of Madrid, trying to sell a home without the corresponding permit or for a price that exceeds the appraisal price may result in the imposition of fines amounting to between €6,000 and €60,000.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Why Are Rental Prices Soaring In Madrid & Barcelona?

17 October 2016 – Expansión

The real estate recovery has led to a boom in rental prices, which has attracted thousands of investors and savers. Buying an apartment to put up for rent represents a low risk, high return investment, which is a very unusual thing at the moment, verging on the edge of “the liquidity trap”. For this reason, rental prices are soaring in the major cities, above all in Barcelona and Madrid, the two lungs of the Spanish residential sector.

Rents in the Catalan capital cost, on average €17.4/sqm/month, up by 18.5% compared to a year ago. In Madrid, rental prices have also risen sharply, by 14.6% with respect to the third quarter of 2015, to €13.8/sqm/month. As such, rents in Madrid are now 20.7% cheaper than those in Barcelona.

However, rents are now more expensive than ever in both cases, including during the years of the real estate boom. In Madrid, the rents previously peaked at €13.4/sqm/month in June 2008 (€0.4/sqm/month lower than today) and in Barcelona, the figure peaked at €14.2/sqm/month, well below the current prices.

All of these findings come from the latest report published by Idealista, based on data at the end of September and an analysis of 63,817 second-hand homes across Spain. In July, August and September, residential rental prices grew by 10.7% YoY and decreased by 3% QoQ, taking the price per square metre per month to €7.6. Rental prices rose in every autonomous region with the exception of the País Vasco.

For Fernando Encinar, Head of Research at Spain’s largest real estate portal “the opening up of the mortgage tap and the high returns from rental properties are turning the sector into a safe haven for small and medium-sized savers”. (…).

Barcelona is the capital city with the highest rental prices in Spain, well above all of the others. And rental prices there are increasing at a rapid rate. In the last three months alone, rents have increased by 7.7% in the Catalan capital, from €14.6/sqm/month to €17.4/sqm/month.

The quarterly increase in rental prices in Madrid amounted to 5.3%, from €13.1/sqm/month to the aforementioned €13.8/sqm/month. A year ago, that figure stood at €12.1/sqm/month.

In the ranking of capitals, Barcelona and Madrid are followed by San Sebastián (€12.8/sqm/month), Palma de Mallorca (€11), Bilbao (€10.7) and Vitoria, Málaga and Las Palmas (all €8.1). At the bottom end of the table are the cities of Lugo (€4.1/sqm/month), Ourense (€4.2) and Cáceres (€4.3).

Julio Gil, Chairman of the Foundation for Real Estate Studies, thinks that there we are seeing a natural shift from ownership to rental, which makes the rental market more expensive. “The homes up for rent in Madrid and Barcelona, which are mature markets, are still the same more or less, but there is now a lot of (new) demand from emancipation, which means that owners are raising prices”, he added. “The growth in supply is much lower than the growth in demand”, said Gil. This explains why the increases are so acute in Barcelona and Madrid.

Rental prices in Barcelona are increasingly more appealing for investors (and increasingly less so for tenants). Nine of the city’s ten districts saw prices rises in the double digits during the third quarter of the year and three of those exceeded 20% YoY. The main rises were seen in Gràcia (+24.6%), Sant Martí (+23.3%), Eixample (+22.3%), San Andreu (+19.5%) and Sants-Montjuic (+19.4%). Moreover, six districts in the Catalan capital have not only recovered the ground lost following the burst of the real estate bubble, they are now at historical highs. For example, rents have never been so expensive in Ciutat Vella (€19 euros/sqm/month), Eixample (€18.8), Sant Martí (€17.5), Sarrià-Sant Gervasi (€17.5), Gràcia (€17.2) and Horta Guinardó (€12.6). (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

INE: House Prices Rose By 6.3% In Q1 2016

10 June 2016 – Expansión

The recovery of the real estate market is picking up strength, so much so that both house prices and the volume of transactions are growing at their highest rates since the burst of the real estate bubble. Specifically, house prices rose by 6.3% during the first quarter of the year, compared with the same period last year; meanwhile, the number of acquisitions increased by 29% in April. All of those figures come from data published by INE yesterday.

House prices, which first started to rise again two years ago, increased significantly during the first quarter of the year. In this way, whilst prices increased by 4.2% during Q4 2015, that rate of growth accelerated by another 2.1 percentage points in the subsequent three months. As such, they have reached their highest rate of growth since Q3 2007, when the real estate market had just started to slow down, but the bubble had not yet burst.

With these figures, it seems that the real estate market has now entered a new phase in its recovery. Although the volume of transactions began to recover a few years ago, prices continued to hit new lows; now, however, it seems like prices are starting to recover too, and with increasing strength, in line with the increase in operation volumes.

Madrid led the price rises during Q1 2016, with an increase of 9.7%, followed by the Balearic Islands (8.8%) and Cataluña (8.6%). That is because those regions include areas with high demand from foreigners and also because, that is where the stock of unsold homes has been more limited. Amongst these regions, the increase in Madrid was particularly strong, given that prices rose by 2.9% with respect to the previous quarter, double the average rate of growth across the country (1.5%) and the highest growth rate seen in any of the autonomous regions.

Conversely, the increase was much more moderate in Castilla-La Mancha, where prices rose by 1.5% with respect to the previous year. Castilla y León and Extremadura (1.7% in both cases) recorded similar increases. Nevertheless, these statistics do not take the shine off of the real estate recovery, given that prices rose at a higher rate than last quarter in every autonomous region. (…).

Finally, the price of second-hand homes rose by 6.4% with respect to 2015 and so outperformed new home prices by 0.3 percentage points (6.1%).


This increase in prices is fuelling the increase in demand, given that the volume of house purchases grew at a rate of 29%, the maximum rate since records of these statistics began back in 2007. Moreover, INE published this data on the same day that the Ministry of Development confirmed that the volume of acquisitions had increased by 20.7% during Q1 2016, with respect to the same period in 2015. Although the methodologies are different, it seems that growth had already become strong during the first three months of the year, before shooting up in April.

The volume of second-hand homes sold rose by 32.3%, whilst the number of new homes sold increased by 17.6%. By region, the highest increase was recorded in the Balearic Islands (61.7%), whilst the lowest rise was seen in the Canary Islands (2%).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake

ING Grants €280M Loan To Tan To Finance Torre Espacio

26 February 2016 – Expansión

It was the major real estate transaction of 2015. The sale of Torre Espacio to the Philippine group Emperador, owned by Andrew Tan (pictured above), last November was the grand finale to a year that all of the experts agree was the year during which the real estate sector finally began its recovery.

But the financial arrangements for this great purchase remained to be seen. The price agreed was €558 million, a figure to which almost €200 million of debt linked to the company Torre Espacio Castellana must be added. The company owns the skyscraper and served as the vehicle through which the Asian businessman acquired the building.

ING Wholesale Banking has now granted a syndicated loan amounting to €280 million with a seven year term, which will be used exclusively to finance this operation. The loan perfectly represents how the financial sector has reopened its appetite for high quality real estate assets.

According to sources, the rest of the operation will be financed directly by the Philippine businessman, one of the wealthiest people in the world according to the Forbes list. It ranks him as the 330th richest person on the planet and the third richest in his country, thanks to his fortune, estimated to be worth $3,700 million (equivalent to around €3,300 million at the current exchange rate).

Torre Espacio is one of four skyscrapers that were constructed on land that formerly housed Real Madrid’s Ciudad Deportiva in the North of the Madrid. The building has a gross leasable area of 60,142 m2, spread over 56 floors and 1,173 parking spaces. It is regarded as one of the most important office buildings in Spain and its main tenant is the former owner, Grupo Villar Mir, which occupies more than half of the property.

ING, which has acted as the sole underwriter and agent bank, highlights that this loan is a clear example of “the bank’s commitment to real estate financing in Spain and its significant profile in the Asian markets”, according to a statement made by Íñigo Churruca, CEO of ING Wholesale Banking. The entity is currently working to share the risk with other banks, although it is expected to take on the majority of the financing itself.

The entity also closed a financing agreement with Merlin Properties in January this year, amounting to €67.9 million and with a five year term, to finance the purchase of a portfolio containing seven logistics assets.

In addition, last year, it granted a syndicated loan amounting to €125 million, with a seven year term, to Acciona Inmobiliaria, which the company allocated to Urbanizadora Coto, a subsidiary of the group owned by the Entrecanales family that owns seven residential buildings and two offices, as well as a 50% stake in the Arturo Soria shopping centre, in one of the best areas of Madrid, close to Parque del Conde Orgaz.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

The Prices Of Apartments Rise By 5%, Caused By Mortgage Holdback

1 September 2015 – Expansión

REAL ESTATE RECOVERY / The bank turns the tap on and grants 26.3% more of housing loans. Sales rise by 11%, thanks to the boom in the secondary market, surging 43.5%.

Mortgage lending, home sales and price per square meter guarantee consolidation of the residential market recovery. And by recovery we mean stabilization, which is the phase that really promises getting out of the hole. After seven years of deep recession, the vital signs of the real estate are very evident, but the important thing is that the upward trend stabilizes: there is more credit (26.3% increase in June) and, therefore, more formalized sales (11.1% rise in the second quarter) and the prices go up (by 5.1% between April and June).

The first link in this chain is the mortgage. Signing of mortgage loans for house purchases reached the abovementioned interannual 26.3% in the sixth month of the year, up to 21,454, as noted yesterday by the National Statistics Institute. The average amount was 103,626 euros, 4.2% more.

The month rate rose by 8.7%. And this is the first positive data recorded in the sixth month of the year since the beginning of the crisis. The communities with the highest monthly growth rates in the number of home mortgages are the Canary Islands (38.3%), Balearic Islands (31.7%) and the Basque Country (26.8%). With the highest annual rate: Aragon (59%) and Cantabria (52.5%).

The cumulative increase of mortgage lending exceeded 21% in the first six months of the year, and that of the borrowed capital 25%. This “shows that the banks have turned on the mortgage tap and are not as strict now with the profiles they analyze”, notes Fernando Encinar, Head of studies of Idealista.

Also (and most importantly), “the average amount is maintained at very reasonable levels”, above 100,000 euros, as points out Manuel Gandarias, Director of the Office of Studies of And that “can revoke the revival in growth of housing prices,” adds Encinar.

Therefore it is expected “that the sector continues to grow with the sustainable encouragement from the bank,” predicts Gandarias. “The advancement in granting of mortgages is positive and confirms that 2015 will be a year of recovery for property sector in most of the state ‘, concludes Encinar.

Meanwhile, the repeat sales house price index of the Registrars Association rose by 5.1% YoY in the second quarter, and by 2.8% QoQ, “thus consolidating and enhancing the change in trend begun in 2014”, according to the registrars.

In April, May and June 87,187 house sales were registered in property records, which is the second highest quarterly result of the last nine quarters, and an increase of 11.1% compared to the same quarter of 2014. 335,163 operations were registered  in the  last twelve months, 2.7% more than the cumulative result of the first quarter of this year.

The 68,705 quarterly sales and purchases of used homes (interannual increase of 43.5%) represent the highest result of the last twenty-eight quarters. “You have to go back to the first half of 2008 to find a number of quarterly transactions in used homes so high. Surely this is a clear sign of the housing market recovery, “emphasises the report.

According to the real estate consultant Jose Luis Ruiz Bartolome, what is happening is that “the investors are following the footsteps of the market leaders, which are opportunistic funds and REITs. Besides, the economic and labour market recovery can be seen a little.”

So, “if nothing strange happens, we can say that the sector begins to stabilize,” he adds.

Original story: Expansión

Translation: Lee La

340% Employment Upsurge In Real Estate Sector

1 September 2015 – Expansión

Spain continues to lead in the increase of jobs in Europe. According to the tenth edition of the European Job Index, made by Robert Walters, during the second quarter of 2015 the amount of job offers has increased by 21% YoY, 9% more than in the previous quarter, while the average increase in the Old Continent has been 11% (Ireland 19%, UK 18%, Luxembourg 16%, Belgium 11%, Netherlands 10%, France 7%, Germany 4% and Switzerland -4%).

By sector, the real estate is the one taking the prize, with an increase of 340% in demand for profiles, followed by Banking and Financial services, with 140%, Compliance, 107%, and Property and Building, 40%, thanks to the improved investor confidence and the progressive recovery of the banking sector.

Since the beginning of 2015, the residential and tertiary market has shown signs of improvement, as well as real estate market due to the commercialization of large park homes, shops and offices. Policy changes in regulated markets, especially in Banking and Financial services, and in Energy, have made it necessary to hire leading specialists and Compliance managers to provide counseling for new projects.


These were not the only fields in which the demand for professionals has increased. According to the study of Robert Walters, the health sector has grown by 65% YoY during the second quarter of this year. And the most sought profiles are International area manager, Regulatory affairs specialist and Medical advisor, which are in demand mainly by pharmaceutical companies.

Multinational companies and SMEs supported by venture capital firms (or private equity firms) of the automobile, logistics and energy efficiency sectors have demanded Business development managers and Chief operating officers, with an experience of between five and eight years and knowledge of several languages, which has led to a 40% vacancy increase in Logistics and Supply Chain.

New technologies could only continue its ascending rate. As proves the report, assuring that this sector has experienced a 29% increase in job offers thanks to the need for companies to invest in digital platforms and internal processes of digitization. Thus, mainly middle managers, specializing in a certain technology (SAP HANA, APO, MM, CRM) with a high level of English, have been in demand.

The aim of the companies to increase their presence and improve their profits has contributed to a greater demand for qualified professionals to fill in marketing positions (26%).

Job offers for Accounting & Finance have grown by 20% in the second quarter. The boost has been mostly due to professional services firms and technology companies that have sought to strengthen their finance departments through increased activity.

Original story: Expansión

Translation: Lee La

House Prices Keep Rising, Approaching 5.1%

1 September 2015 – Expansión

The real estate market continues its slow but steady recovery. In the second quarter of the year house prices increased by 5.1% compared with last year, placing this rate exactly in the pre-crisis level, as indicated today by the data of Property Registrars Association (Colegio de Registradores de la Propiedad).

This price rise, 2.8% in the second quarter as opposed to the first, was accompanied by an increase in the number of sales operations, which also grew by solid 11% YoY. Thus, between April and June, property records registered 87,187 home sales operations, representing the second highest quarterly result in the last two years. However, only in the second quarter the number of transactions fell by 3.7%, due to an exceptional increase in these registrations between January and March, explain registrars.

These experts believe that the year growth of housing prices “strengthens and intensifies the turnaround begun in 2014”. That said, they add that “the high growth rates (of house prices) are not foreseeable for the next quarters,” as the recovery in demand has been very progressive.

Moreover, they say it is “desirable that this housing market recovery, especially of housing prices,” occurs with moderate growth rates. This, in their opinion, will help to consolidate high levels of demand, thus depleting the new housing stock pending for sale, allowing also to absorb the newly built stock.

Andalusia (with 17,751 sales), followed by Catalonia (13,228) and Valencia (12,760) were the communities with the highest number of such operations in the second quarter. Demand for housing by foreigners also continued recovering. Home purchases registered by non-residents rose from 12.2% of the total between January and March to 12.8% in the second quarter.

Similarly, another indicator of the stabilization of real estate market has been the reduction of  the number of foreclosures (distraints mostly) for non-payments,which decreased by 4.8% compared to the previous quarter and 11.1% compared to last year.

Original story: Expansión

Translation: Lee La

Happiness Will Return To The Housing Market In 2015

3 February 2015 – Expansión

REAL ESTATE RECOVERY / The return of banks to the mortgage market and the increase in domestic investment are allowing Spain to emerge from the deepest and most intense crisis to hit the housing market in decades. During 2015, 440,000 homes will be sold, 20% more than last year, but far fewer than the 950,000 transactions recorded in 2006. Some of those currently renting properties will now purchase their own homes, thanks to the low interest rates.

Happiness yes, cause for celebration, no. The party ended in 2007 and there is no prospect of it returning, in either the short or medium term. Nevertheless, despite the high levels of unemployment (5,457,700 people were out of work at the end of 2014) and the low wages earned by a substantial part of the population (7,861,844 employees declared monthly income of less than €967.94 in 2013), the recovery of the housing market will become a reality in 2015.

And we will not only see green shoots, but rather an upwards trend that will be consolidated over the next few years, since the main variables in the housing market (number of sales, prices and new builds) will perform better in 2016 and 2017 than during 2015. Therefore, 2015 will be the year in which the deepest and most intense crisis to hit the housing market in decades, which battered the housing market in Spain for 7 long years, finally came to an end.


The recovery will be significant in terms of the number of transactions, which will increase by approximately 20% with respect to 2014. Thus, if sales in 2014 amounted to approx. 365,000 homes, in 2015 they will be close to 440,000. Although we expect there will be approx. 75,000 more transactions than in 2014, this figure will still be 500,000 below the one recorded in 2006 (when 955,186 homes were sold – the highest number of sales ever made in Spain). Furthermore, the figure will be less than the number of sales made in 2009 (463,719 homes), a year when GDP fell by 3.6%. But that was, undoubtedly, a very different environment to the one we are now facing in 2015, with economic growth forecasts for the year of 2.2%.

The increase in the number of transactions will mainly take place in the large cities and especially in the streets where the wealthiest populations live (the upper and upper-middle classes). In those areas of Barcelona and Madrid, sales growth will be dramatic, exceeding the levels recorded in 2014 by almost 50% in certain cases. The main reasons for this differential behaviour with respect to the rest of the country, aside from the higher wealth and monthly earnings of residents will be: an increase in the desire to invest in housing; an improvement in the ease of access to mortgage lending; and the existence of a considerable latent demand for housing from people who have lived in rented properties until now. Sales will also increase in provincial capitals, tourist areas and small towns (those with fewer than 20,000 inhabitants), although at substantially lower rates.

Why will the demand for housing increase?

The main reasons why the demand for housing will increase considerably are:

a) Growth in mortgage lending. Having passed their stress tests, financial institutions will increase the loans they grant as they face reduced opportunities for generating profits from the purchase and sale of public debt or the disposal of non-core assets. This means that mortgages will become a ‘hook’ product once again, i.e. they will be designed to focus more on attracting new clients or retaining existing clients, than on generating large margins per euro borrowed.

This phenomenon will lead to an overall reduction in the spread over Euribor to 0.75% and the appearance on the mass market of 35-year mortgages. On a selective basis, we will also see the return of loans for financing house moves (when a client first buys his new home and then sells his old one), as well as those granted for 100% of the value of the home for properties that are not owned by the bank.

In light of all of this, unlike in 2014, when credit granted to families to purchase homes decreased by around 3.5%, lending will increase by approximately 8% in 2015. Undoubtedly, this will represent a substantial change that will result in a return to normality for mortgages used to finance home purchases.

b) A substantial increase in the number of domestic investors. Neither the Russians (of whom there will be more sellers than buyers in 2015), the British or the Germans will be the leading players in 2015; the main players in the market will be Spanish. The expectation of the recovery in prices, the high volatility of the stock market, the low nominal returns offered by bonds over the short term and the risk of incurring losses over the long term will all cause investors will return to the housing market.

Acquisitions will predominantly be made in the areas where investors reside (a classic real estate investment) or in the centre of cities, with only a small percentage of buyers preferring to acquire a residence on the beach or in the mountains. Despite the attractive prices (in some cases less than €60,000), almost no one will purchase in small towns. The main reasons are: the extreme difficulty of renting out homes purchased in such locations, given the huge over-supply and the population declinethat many of them have suffered, as well as the poor prospects of any appreciation in the value of such assets in the short and medium term.

c) The displacement of some of the demand for rental towards purchasing. In recent years, many families have chosen to rent (rather than buy) in the hope that: house prices would fall further; the uncertainty surrounding their future in the company they work in would diminish; and they would manage to save the capital required to put down a deposit on a house, which banks do not normally finance. Nowadays, many of them believe that house prices are going to go up rather than down in the near future, they see redundancy at work as a less likely prospect and after years of saving, they are now in a position to be able to buy their dream home.

Furthermore, given the historically low Euribor rate in December 2014 (0.329%) and the expectation that the ECB’s reference interest rate will continue at a very low level for at least the next three years, they note that it is now much more advantageous for them to buy a property rather than rent. The reason is that the monthly interest payable on mortgages taken out now, will be lower than the rent charged for a similar home, in the vast majority of cases.

d) The macroeconomic recovery. Economic growth of 2.2% will generate an increase in profits for a significant number of self-employed people and small business-owners. This will cause some of them to decide to move house or invest in an additional property. However, the creation of more than 350,000 full time equivalent jobs (under the national accounts methodology) will have a minor impact on the demand for housing, since the vast majority of the roles generated will be temporary or part-time and will be poorly paid.


Overall, house prices will increase by around 5% across the country, and the key driver will be the significant increase in demand in the large cities. The highest annual increase will be observed in the best areas of Barcelona and Madrid, where it will exceed 10% in some cases. In the tourist areas that are furthest from the beach, ski resorts and in the neighbourhoods of provincial capitals, where there is already a significant over-supply of properties, no price rises are expected. Activity will return (in terms of the number of transactions) in these locations, but prices will remain stable.

In some small towns, prices will continue to decrease, although at a significantly lower rate than in recent years. The decline in population numbers, low rental yields (less than €200 (per month) in many cases) and the inability of most of the population that live in rental accommodation to obtain a mortgage, mean that demand for housing (in small towns) will continue to remain very low, although it will be higher than in previous years.

According to the historical data provided by the Ministry of Development, the 5% price increase means that by the end of 2015, the average cost of an unsubsidised home will be roughly equal to the prices last seen in the second quarter of 2004. This comparison clearly shows the significant decline that house prices have suffered during the crisis; specifically, house prices fell by 42.8% between the first quarter of 2008 and the third quarter of 2014. Nevertheless, due to the large speculative bubble in the housing market in 2007, this statistic does not indicate anything conclusive about whether homes now are cheap or not.

In theory, this aspect should allow us to clarify the indicator known as the ‘degree of effort’, which measures the percentage of the salary of an average family (i.e. the one that has an equal number of families earning more and less than it) that is spent on mortgage repayments. This effort, according to calculations published by the Bank of Spain, currently amounts to 35%, which is lower than in September 2008 (41%), but much higher than in December 1990 (20.2%).

My interpretation is that for many families, especially for the majority of those who earn less than €2,500 a month, buying a house is just not an option. By contrast, for those that have accumulated significant wealth or earn a relatively good salary, housing is currently a cheap asset.

New builds

In 2015, developers will begin the processes required to build around 65,000 homes. This figure represents an increase of 60% on the previous year (40,000 in 2014), but nonetheless represents less than 10% of the number of new builds that were expected to be built in 2006 (915,745 homes) and does not represent even a quarter of the number of new homes that should be built in any given “normal” year (350,000 homes).

Unlike in previous years, if a plot of land is well located, banks will provide loans for construction on it to finance around 80% of the total cost of the development. Some entities may even begin to partially finance the purchase of plots of land in the best areas of large cities.

Despite this positive outlook, it is likely that none of the next few years will be considered as “normal” years in terms of house construction, since the huge over-supply of homes in many small towns; in quite a few medium-sized towns; and in numerous tourist areas, will hamper the construction of new homes in 2016 and 2017, with fewer than 175,000 being built each year.

In summary, 2015 will see the beginning of a recovery in the housing market and this will result in a period characterised by moderate price rises and significant growth in terms of the number of transactions. Nevertheless, during the coming years, both variables will continue to remain well below the figures achieved in 2006 and 2007.

Therefore, no one should confuse the recovery that is now beginning with the birth of a new bubble.

Original story: Expansión (by Gonzalo Bernardos, Director of the Masters Program in Real Estate Advice and Consulting, at the University of Barcelona)

Translation: Carmel Drake