16 November 2018 – Expansión
The housing market is showing a dynamism during 2018 not seen since the years before the crisis. The boost in demand in the last few months has resulted in the sale of almost 400,000 homes during the 9 months to September, the highest figure since 2008, which is driving prices up.
House sales amounted to 396,481 units between January and September, up by 12.5% compared to the same period in 2017, and the highest figure recorded since 2008, when 448,146 units were sold during the first 9 months to September, according to Real Estate Registry Statistics for the third quarter, published yesterday by the College of Registrars.
Data for the first nine months of the year also came close to the figure recorded for 2017 as a whole, bearing in mind that last year 464,223 transactions were closed in total. This year, it is likely that a record figure will be registered, which could reach half a million operations. During the third quarter, 133,295 operations were closed. “These results confirm the notable strength of the housing market (for sales)”, explained sources at the College of Registrars.
The strong dynamism responds in large part to the demand for investment. Buying a home for rent has become an alternative refuge for domestic and overseas investors alike, who find returns in the real estate market that other assets, such as deposits and public debt cannot offer. Moreover, during the last 12 months, the initial interest rate for taking out a mortgage has been at a historical low (2.27%).
The strong activity in the sector is also raising house prices, which increased by 6.7% in YoY terms in the last quarter. The recovery of the sector has allowed prices to rise to 26.5% above their minimum levels. Over the next few months, the registrars expect prices to continue to evolve in line with their current performance, albeit at single-digit rates. The rises will be greater in the main capitals.
These increases are being favoured by the heating up of the sector in certain areas. The largest increases during the third quarter were recorded in Teruel (37%), Huelva (34.8%) and Castellón (33.8%), but Madrid, Barcelona and Málaga led the activity in the market in absolute terms, with 20,048 homes sold in the case of Madrid, 14,217 in Barcelona and 9,828 in Málaga (…).
Foreigners are buying more homes than ever in Spain. According to data from the General Council of Notaries, during the first half of the year, they closed 53,359 operations, the highest absolute figure in the historical series, which began at the start of 2007.
By segment, second-hand homes continue to account for the majority of the market, with 82.4% of sales, compared with 17.57% for new homes (…).
Sources at the College of Registrars detect a possible “scenario that is running out of steam following the intense upward path that has been seen over the last few quarters”, and they warn that we “may have reached a maximum point in the current cycle in terms of the number of house sales”.
That is partly due to the increase in prices, which “is not sustainable or desirable in the current economic situation”. The intense double-digit growth in prices seen in recent months “cannot be borne by a market comprising potential buyers whose incomes cannot absorb such an intense increase in prices”.
But they clarify that it does not mean that we are going to see a correction (reduction) in prices in YoY terms, rather that we can expect more moderate increases (…).
Original story: Expansión (by I. Benedito)
Translation: Carmel Drake