Tag: research

Cepco: New Build Starts Could Reach 80,000 Units By Year-End

7 November 2017 – Cinco Días

With barely two months to go before the end of the year, forecasts abound about what is going to happen to house prices, house sales and construction activity in the residential sector. After three years (2014, 2015 and 2016) during which the sector has gradually emerged from the worst real estate crisis in recent history, 2017 is going to be remembered as the year in which the improvement in all the variables was consolidated, property developers returned to the stock market and overseas investment in the sector reached record levels.

The only but that continues to mark this recovery is its heterogeneity, given that prices are not rising by the same amount in every autonomous region and homes are nowhere near as easy to sell in Cáceres as they are in Madrid (for example); moreover, cranes are not expected to return to certain regions for a long while yet.

Nevertheless, 2018 can be summarised by the fact that we expect to see more of the same. Prices will continue to recover, even reaching double-digit growth rates, above all in Madrid, Barcelona and certain parts of the Mediterranean Coast; transaction volumes may exceed the 500,000 unit threshold; and the number of new homes started will amount to 80,000 units, if the current rate continues.

And that is because the statistics in aggregate terms reveal some very significant increases, both in terms of transaction volumes and new home starts. For example, between January and August 2017, 56,000 new homes were sold in Spain, up by 5.8% compared to the same period last year, according to the latest report from the Spanish Confederation of the Associations of Construction Product Manufacturers (Cepco).

That represents quite an accelerated rate, with which permits for new homes are trying to keep up. During the first seven months of this year, 49,200 new permits were granted, up by 9,700 compared to the same period last year, which represents an increase of no less than 24.4% in relative terms.

That is what is causing the experts to predict that if these trends continue, then work could begin on the construction of around 80,000 new homes by the end of this year. If that volume of construction ends up being confirmed, the level of activity recorded in 2016, when 64,038 homes were started, will have risen by 25%. Nevertheless, these figures are still well below the more than 865,000 new home permits that were granted in 2006. And a considerable distance from the 200,000 or 250,000 that the consensus of experts in the sector believes will represent the real estate market’s cruising speed over the medium term.

Meanwhile, the number of finished homes also grew significantly during 2017, by 40%, although in absolute terms the figures are still minimal (33,085), as Cepco’s research acknowledges (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

IPE: House Prices Will Rise By 7.5% In 2016

28 November 2016 – Expansión

According to the Institute of Business Practice (IPE), house prices are booming, driven by a significant increase in sales (+17%). Mortgage lending (+8.7%) and building construction (+25%) are also underpinning the recovery of the sector, which will reach cruising speed in 2017.

Prices, sales, construction permits, mortgage lending, building construction, returns from rental properties…all of the major indicators in the residential market are growing at a strong pace in 2016, the year of consolidation for the real estate recovery. The housing sector has switched gears and is progressing, steadily, towards sustainable figures.

The end of year forecasts from the Real Estate Academic Arm of the Institute of Business Practice (IPE) confirm this trend. Firstly, the forecasts show that the average sales price of homes will rise by 7.5% this year (…). By the end of the year, the average home will cost €144,973, a level not seen since the end of 2012. It is worth remembering that, according to Spain’s National Institute of Statistics (INE), average house prices rose by 4.2% in 2015, the largest increase since 2007 (5.7%). If IPE’s predictions are correct, the price rise this year will be the largest increase since the recovery of the property market.

In addition, according to the XXII Real Estate Pulsometer from the IPE, house sales are soaring, by 17.2%, to reach 414,812 transactions, the best figure since 2010,and 9% higher than in 2013, which is when the sector bottomed out.

Permits and house starts are also rising, but they are starting from a very low base. Permits have increased by 25%, from 35,945 to 44,880. This forecast represents the most abundant activity in terms of cranes since 2012, but it is light years away from the years of the boom, when more than 700,000 house starts were recorded per year. The number of urban mortgages granted – over plots of land, homes, garages, premises, etc. – is expected to grow by 8.7% and the amount loaned is forecast to increase by 14.9%, according to the study, prepared using data from MAR Real Estate’s network of real estate agents and the Network of Qualified Real Estate Advisors, which has been cross-checked with official data from INE, the Ministry of Development, the College of Registrars and the Notaries.

Two speeds

At the same time, the surplus of unsold new residential properties is expected to decrease significantly. At the end of 2015, this stock amounted to 433,583 homes. In 2016, a quarter of that volume has been drained, with 326,295 units left. That figure is less than half the stock recorded in 2014 (675,945), according to the IPE’s study.

Almost all of the unsold homes are located in areas with limited demand or are properties that fail to fit with the current needs. By contrast, in the most established and sought-after areas, such as the centre of Madrid and Barcelona and along the main areas of the Costa del Sol, homes, and even land, are scarce. In other words, the recovery is still happening at two speeds, but the difference is less acute, in the sense that, it is now widespread across almost all of Spain.

What’s more, the residential rental market is recovering strongly (by 4.4% gross per annum, or 8.3% with capital gains) (…).

With these statistics, the residential market is heading towards its cruising speed. The outlook for 2017 is encouraging, although all indicators point towards a slow down in terms of the increase in house prices. (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake