Tag: Sociedad de Tasación

Gómez-Pintado: Housing Stock Will Decrease By 25% In 2016

23 November 2015 – El Economista

After the summer, the stock of unsold homes in Spain amounted to 462,000 properties, i.e. less than half the number recorded in 2008 (1.2 million). Moreover, this supply is forecast to decrease by 24.5%, i.e. by one quarter, next year, down to 349,377 homes.

That is according to analysis published on Friday by Juan Antonio Gómez-Pintado, the President of Asprima (Madrid’s Property Developer Association) at a conference entitled “Economic outlook for 2016 and trends in the real estate sector”, organised jointly with Sociedad de Tasación.

This estimate, prepared using data from Spain’s National Institute of Statistics (INE), the real estate professorship at the Institute of Business Practice (IPE) and the Network of Qualified Real Estate Advisors (RAIC) indicates that 74% of the remaining stock is located in the Community of Valencia, Castilla-La Mancha, Andalucía and Murcia, and that next year, this percentage will decrease to 51%.

Meanwhile, the stock of empty homes in Madrid will decrease to 6,000 properties next year, whilst in Cataluña it will drop to just over 4,300 homes.

On the other hand, Gómez-Pintado, also indicated that, taking into account migration flows, the need for homes in Spain will amount to around 140,000 properties over the next few years, with Madrid playing a particularly important role, where the figure will range between 30,000 and 40,000 homes.

Original story: El Economista

Translation: Carmel Drake

ST: Some House Prices Still Need To Fall By 15-20%

28 September 2015 – Cinco Días

Is it compatible to say that the market is moving towards stabilisation and at the same time that the prices of some homes still need to decrease by a further 15% to 20%? Most of the experts and the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno (pictured above), think so. They argue that those two facts can coexist in time and that they show that the real estate market is slowly emerging from the worst crisis in its recent history.

“We are currently undergoing a period of stability, not recovery”, said Fernández-Aceytuno last week during the presentation of his appraisal company’s latest report, prepared in conjunction with Planner, which outlines the new profile of the home buyers attending events such as SIMA in Madrid. The Head of Sociedad de Tasación explained that there is still some way to go in terms of what needs to happen from now on for us to be able to speak more openly about a recovery in the market.

Greater confidence

Given the evolution of appraisal market, Fernández-Aceytuno considers that there are still many places where house prices need to decrease by a further 15% to 20% for the supply to match up with the demand. In fact, he points out that we can only talk about a recovery in a handful of regions, where sales now significantly exceed the levels recorded a year ago and where new developments are being constructed once again.

Moreover, he said that the improvement in the market for the securitisation of mortgage loans must continue following the first operation (for several years) signed in June, and that the growth in employment, household income and GDP must all strengthen. “All of the ingredients are present for demand to react. What is happening now is that an increased level of confidence is being demanded, investors are being more prudent and potential buyers have realised that investments in housing are not infallible”, said Fernández-Aceytuno.

In this sense, he commented that we cannot talk about a full recovery yet in a market in which the transactions being conducted by foreign investors and buyers carry a greater weight than those being undertaken by first time buyers, as a result of the creation of households, or those that want to acquire better homes (as corroborated by Solvia’s study published on Tuesday). How long do we have to wait for this recovery then? “It is impossible to say, but it will take years, not months”, concluded the CEO of the appraisal company.

Meanwhile, the report prepared by Planner and Sociedad de Tasación, which analyses the profile of potential buyers attending real estate fairs, such as SIMA, reveals that the typical profile is younger (aged between 25 and 35), with greater confidence in the future, with larger budgets and looking for larger homes, according to the CEO of Planner Exhibitions, Eloy Bohúa.

According to the report, in parallel, there has been an increase in the number of older buyers whose main motivation is to improve their current home or to move from rented housing to their own home.

Some of the impediments that prevent the closure of more operations include, in order of importance: price, financing (a lack of it) and uncertainty regarding employment conditions.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Now Is The Time To Invest In Housing

11 May 2015 – Expansión

The real estate sector is taking off / The real estate sector is becoming more attractive for investment purposes. Now is the time to buy, above all in the exclusive neighbourhoods of the large cities and in certain areas along the coast. Renting generates good returns.

Real estate investment is gaining lustre. Increasingly, experts are saying that the market has bottomed out and now is the time to buy.

House prices, which fell by 50% on average from (the heights of) the property boom, are experiencing a clear process of stabilisation and are now showing signs of gains in some places. The valuation company Tinsa highlights that Barcelona, Palma de Mallorca, Málaga and Burgos are the cities that experienced the highest inter-annual price increases during the first quarter, of between 0.1% and 5.4%. On average, prices rose by 3.3% during the first quarter, according to Sociedad de Tasación, reflecting even more optimistic data.

But beware, the experts warn that although investment opportunities exist, not all investments are good – many homes are still valued above market price. Nevertheless, in the most sought after areas, waiting to buy could be a mistake, since homes will be more expensive and there will be more people interested in making bids for them.

Location is key. The most profitable areas to invest in are the best areas of the large cities, especially Madrid and Barcelona, as well as the most established coastal enclaves, such as the Costa del Sol. For example, the gross annual return on a 100m2 home in a prime area of Madrid is around 5.2%.

The banks have more than 150,000 properties to sell through their websites. The discounts (they are offering) are less aggressive than during the peak of the crisis and there is an extensive supply of holiday homes. The most pronounced reductions are located outside of the premium areas, but homes in those regions are more difficult to monetise.

Rental returns

One of the most recommended strategies at the moment is ‘buy to let’. According to the President of the Foundation for Real Estate Studies, Julio Gil, “buy to let is currently one of the best alternatives for small investors in terms of return and risk”. You can obtain an average return of 4.7%. In the case of retail premises, the return that you can obtain increases to 7%; for offices, it amounts to 6.4%; and for parking spaces, it averages 4.6%, according to a report from Idealista.

These returns are significantly higher than the 1.6% offered by a 10-year Spanish treasury bond. Meanwhile, according to the Bank of Spain, average returns on 12-month deposits are below 0.5%.

One of the elements that reflects the reactivation of the real estate market is mortgage lending. It increased by 1.6% in 2014 to reach 203,000 loans, whereby turning the tables on seven years of decline. The improvement was even more dramatic in February, with an increase of 29.2%. Nevertheless, the figure still falls well below the equilibrium point, which is 450,000 (mortgages) per year, according to Sociedad de Tasación.

The financial institutions are optimistic and say that new credit will increase this year. Analysts at Moody’s ratings agency agree. They consider that the increase in mortgage lending will improve demand in the real estate sector, which in turn may help to increase property prices.

The financial institutions have already launched (campaigns) to secure clients and obtain customer loyalty during this period of recovery. Most of the offers from the banks are variable rate products (mortgages). The best deals have spreads of between 1% and 1.75%. However, it is important not to focus on the differential alone, since in some cases opening and cancelation fees apply, whereas in other cases they do not. Moreover, each entity usually requires a minimum income, which varies from one to another (from between €500 to €5,000 per month). Furthermore, in almost all cases, the banks require borrowers to purchase other products such as insurance and pension plans or (to commit to a minimum) credit card spend. Meanwhile, interest rates on fixed rate mortgages vary from between 2.4% to 5.5%.

Original story: Expansión (by C. Rosique)

Translation: Carmel Drake

Foreign Investment ‘Pulls Up’ House Prices In 8 CCAA

15 April 2015 – El Economista

The housing phoenix is rising from the ashes, but, as yet, it is not soaring with equal force across the whole country. After 2014, which was year zero for the sector after seven years of hard-hitting decreases, the foundations are being laid in 2015 for a new cycle. Whilst in the large cities, such as Madrid and Barcelona, (the recovery) has taken off, fuelled by foreign investment, tit is still weak and flighty in areas with lower demand; nevertheless it is still a recovery.

The revival of the mortgage market, accompanied by an environment of low interest rates, a good overall economic climate and the outlook for growth both in terms of consumption and production, has generated the ideal breeding ground for the real estate sector to return to our economy, although in terms of size it is still well below its pre-crisis levels.

According to data from the National Construction Conference (Conferencia Nacional de la Construcción or CNC), in 2007, construction accounted for around 22% of GDP. Today, it represents approximately 5%. Leaving the excesses of the real estate boom aside, the prudent return of construction activity is important to enable proportional feedback between the Spanish economy and housing.

Where is real estate taking off?

After the hangover of the crisis, the housing sector is starting to record its first price increases. According to Sociedad de Tasación (ST), the average price of new and used homes increased by 3.3% during the first quarter of 2015 to record nine consecutive months of increases. With the latest rise, the (average) price per square metre amounts to €1,316, according to the Trends in the Real Estate Sector report. Nevertheless, the evolution is very uneven across Spain.

The value of properties in eight autonomous communities has increased. Navarra, led the ranking with an increase of 6.7%, followed by the Balearic Islands (6.5%), Valencia (5.7%), the Canary Islands (5.4%), Madrid (3.8%), La Rioja (3%), Andalucía (2.8%) and Extremadura (0.3%).

Fluctuations are still expected

Nevertheless, as Juan Fernández-Aceytuno, CEO of ST, notes, this data should be interpreted with caution, given that it comes in the context of a decrease of around 45% in the price of homes; as such the downward trend has less distance to travel. Moreover, if we focus only on the price of new homes, then the decrease has not bottomed out yet.

All of this, he explains, draws a picture that is characterised by “stabilisation, but with a serrated edge”. In recent months, positive and negative data has been recorded and the distribution of the recovery is uneven. Therefore, although the majority of the experts agree that house prices have bottomed out, it is too early to talk about a full recovery. For that, the CEO of ST says, the figures for the number of transaction and mortgages granted will need to return to the levels last seen in 2001 and 2002. And he adds that those two variables are the ones that are really going to shape the evolution of the real estate sector. “A market the size of Spain should be granting around 750,000 mortgages and closing 800,000 house sales per year”, he says.

Who is buying?

Despite the opening up of the credit market and the improvement in conditions, the level of financing continues to be low and does not stop flowing between families; this brings us back to a position of prudence, says Fernández-Aceytuno. “The stored-up demand will have to be released at some point”, but decisions to buy are still being postponed. Price decreases and greater employment stability may provide a boost for all of those latent buyers.

So, who is behind the increase in the number of house sales? José Luis Ruiz Bartolomé, expert in the real estate sector and author of the book ‘Return, property, return’ (‘Vuelve, ladrillo, vuelve’) explains. After the necessary price decreases, there has been a strong inflow of foreign investment, both by funds as well as individuals, especially in the coastal regions. Moreover, as this expert indicates, more homes are being sold, but “location is becoming very important”.

The outlook, therefore, is that the evolution (of prices) will be very different in some areas than in others. This is confirmed by the report about the residential market in Spain issued by Maxxima REA, which states that 2014 was the turning point for real estate investment in Spain. According to the study by that real estate consultancy firm, transactions to date have been concentrated in Madrid and Barcelona, and have focused on prime assets, whose supply is scarce. As a result, the prices of higher quality assets in better locations have increased.

More properties are being bought and sold

What is undeniable is that the evolution of prices is supporting the revival of house sales. According to the latest statistics from the National Institute of Statistics (INE), house sales increased by 15.5% in February with respect to the same month last year, to reach a total of 29,714, whereby recording six consecutive months of increases.

Another positive statistic, but again, one that needs to put in perspective, since it is still a comparison against minimum real estate activity. In terms of the geographical distribution of house sales, the map is uneven. Whilst sales are soaring in Aragón (49.2%), followed by Madrid (28.4%), Barcelona (23.2%) and the Balearic Islands (21.7%), other regions are suffering from a decrease in the number of house sales, including (-22.7%) and the Canary Islands (-5.5%).

The return of the cranes

(…) Refer to article dated 30 March 2015 for these details.

The risks

In this overall market context, the obvious question is “Is this recovery stable”? All of the experts agree that it is. The change in the cycle is here to stay, but they also call for caution because money is “very easily frightened”, according to Ruiz Bartolomé, who warns against two risks: political instability, with the rise of parties such as Podemos, “which scare off overseas investors” and the danger that Spain becomes complacent and puts the brakes on its structural reforms.

At the Sociedad de Tasación, they are more optimistic in this sense and they believe that the risks of destabilisation are remote. “Not even the electoral calendars will have a direct impact on the market”, explains its CEO. However, any sharp rises in interest rates would impact the recovery, however such a move is highly unlikely, especially given the latest monetary policy measures undertaken by the European Central Bank.

Original story: El Economista (by Silvia Zancajo)

Translation: Carmel Drake

ST: House Prices Increased By 3% During Q1 2015

9 April 2015 – Expansión

Nine consecutive months of price rises for the first time since 2007 / According to the appraisal company Sociedad de Tasación, the average price per constructed square metre recovered significantly between January and March.

House prices rose by 3% during the first quarter of 2015, compared with the same period last year, according to data published by Sociedad de Tasación (ST). That made it the third consecutive quarter of house price increases, for the first time since the beginning of 2007, i.e. exactly eight years ago.

And so, the gradual improvement in data from the sector continues, which closed the year 2014 with positive results, leaving behind seven years of deep recession. The number of house sales increased by 2.2% and prices rose by 1.8% (in 2014), according to the National Institute for Statistics (INE).

This year, the price rises have increased to 3%, according to the statement made yesterday by Juan Fernández-Aceytuno, the CEO of the appraisal company, during his speech at the 22nd Meeting of the Financial Sector, organised by ABC and Deloitte. And he added that ST has seen a “double-digit” rise in the number of appraisals requested to support mortgages.

Nevertheless, Fernández-Aceytuno sais that “the data must be analysed with caution”, given “the low (levels) of mortgage lending and the fragility of the labour market”. This long-awaited turnaround may be starting to happen, but caution still prevails in the sector: “We have seen (positive signs) in recent quarters, but we will have to see whether the price curve ends up flattening out; currently, I can not see any signs that point clearly to an increase in demand, rather, (I see) a turning point.

For the housing market to fully recover, there needs to be an increase in demand and in the number of mortgage granted, adds the CEO of ST. In 2014, only 240,000 home loans were granted, well below the “cruising speed” required for a recovery, which experts agree is around 450,000 mortgages (per year). “When we return to the volumes last seen in 2001 and 2002, then we will be able to say that the recovery has begun”, adds Ferndández-Aceytuno.

BBVA’s research service is more optimistic. Its Spanish Real Estate Flash report for April says that (it expects) the sale of homes, construction and the signing of new mortgages to continue to rise, driven by the favourable economic climate.

It is clear that the net downwards trend is coming to an end. Albeit, gradually. In fact, the average appraisal value of homes per square metre has varied over the last seven quarters. “The last three quarters have been very positive, but the quarters prior to that involved fluctuations. As such, this positive data may be temporary”, explains Fernández-Aceytuno.

As well as the volatility and fragility of the sector, the real estate analysts’ reservations stem from real estate statistics from the General Council of Notaries, which shows that the euphoria in the residential market is cooling. The notaries reported a 10% decrease in sales in January. Nevertheless, on the upside, mortgage lending increased by 11.4% (during the same period).

Caution aside, what is certain is that the property market has changed direction. “This is the first time in seven years that we are seeing this data”, says Fernández-Aceytuno. The seven quarters at the start of the turning point in the real estate sector “have coincided with seven quarters of GDP growth”, he adds.

“There is consensus that, with the environment of low (interest) rates in the short term, it is very likely that the financial institutions that own cheap land will start financing the market once again, through property developers, whereby reviving the property market”, explains the CEO of the appraisal company.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

ST: Housing Becomes Investor Safe Haven Once More…

20 January 2015 – Cinco Días

…in the face of stock exchange volatility.

Experts forecast more sales in the future but do not expect significant price rises.

Refurbishments, rental and tourism are the three key niche areas for housing.

The housing market is preparing to emerge completely renewed from its worst crisis in recent history. Or at least that is the view of the latest study conducted by one of the main real estate valuation companies, Sociedad de Tasación. All of the parameters that drive the market are in better shape today than they were a year ago and that, coupled with the challenges facing this activity, means that forecasts are much more optimistic.

The CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, said today that property prices are showing a clear trend towards “stabilisation”. Particularly, in used homes, where the growth in demand has caused smaller price decreases and even the first annual price increases. “In resale homes, we are seeing very clearly that prices have bottomed out, whereas for new homes, if all of the other variables fall in line with our expectations, then prices should reach their minimum levels at some point this year”, said the CEO of the real estate valuation company.

Refurbishment and rental

Speaking of variables, Fernández-Aceytuno, cited three key parameters: employment, purchasing power and finance. Continued improvement in the labour market will be crucial for ensuring that demand for housing continues to increase, now that the banks deem determined to re-establish the flow of credit. “In fact, all indicators show that, as at the end of previous crises, demand is building, as potential buyers wait for prices to come down to the desired level or to the level that they consider they can afford. As soon as that happens, sales will increase” said the CEO of Sociedad de Tasación.

This indicates that over the short to medium term, the market will see more sales without necessarily having to raise prices. And this does not even take account of the fact that some of the circumstances that occurred in the early 2000s, when the last boom in property prices began, are now repeating themselves.

And it is now, like then, that experts believe that housing is regaining its traditional appeal as a safe haven in the face of low returns on deposits and the high volatility of the stock market. With the euro, oil and other commodity prices all in decline, it is inevitable that investments in property and gold, amongst others, become more attractive, explain analysts. In addition, uncertainty exists overseas.

“We see more clouds on the horizon outside of Spain that within it. We are concerned by the situations in Russia and Greece, by terrorism, by how the deflationary situation in Europe will develop in the face of economic and price growth in the US. In Spain, the evolution of the economic situation is critical”, noted Fernández-Aceytuno.

Asked whether international investors seem concerned about the rise in political groups such as Podemos, the CEO of Sociedad de Tasación was keen to minimise the effect that such factors have on the decision-making of companies investing in Spain. “As you would expect, they ask about Podemos, Cataluña and corruption, but we are not aware of any project that has been halted for any of those reasons”, he said.

In terms of future challenges, refurbishment, rental and tourism are the three areas in which experts at the real estate valuation company expect to see the highest growth. In refurbishment, because 90% of existing homes do not meet the requirements of the 2006 technical code. In rental, because buy-to-let is one of the fastest growing trends in the market given its high yields (depending on the area, yields can exceed 6%). And finally, tourism because statistics show that up to 12 million travellers will stay in houses instead of hotels every year, “tourism represents a huge niche in which hotels can compete by buying homes, refurbishing them and offering them up for rent”.

Original story: Cinco Días (by Raquel Díaz Guijarro)

 Translation: Carmel Drake

ST Says New Homes Depreciated by 2.2% in 2014

6/01/2014 – Cinco Dias

Average new dwelling in Spain cheapened by 2,2% throughout 2014, thereby cutting in its 2013 value loss of 7.8% by five points, appraiser Sociedad de Tasacion reports. In its latest update, the firm remarks that over the last six months the prices dropped by only 0.4%, compared with the 1.8% registered in the first half.

Precisely, average price per square meter in provincial capitals showed 1.994 euros, meaning a cost of 179.400 euros for a 90-sqm home. New housing has suffered a 40.2% value loss since its hights.

In 2014, new property prices fell in all the Spanish regions, above all in La Rioja (down 3.7%), Aragon (3.5%), Asturias (3.1%) and Extremadura (3%). On the other hand, the smallest depression was observed in Navarre (down 1.2%), Castille and Leon (1.7%), the Canaries (1.7%), Galicia (1.8%), the Basque Country and Andalusia (down 2% in both).

When it comes to the most expensive capital city, San Sebastian once more tops the ranking with a price of 3.336 euros per square meter, followed by Barcelona (3.129 euros) and Madrid (2.663 euros).

In turn, the most economic new homes are found in Badajoz, Caceres, Ciudad Real and Murcia as they are asking for less than 1.200 euros for a square meter.

According to Sociedad de Tasacion, home-price slump has cooled down due to easier access to financing and better economic outlook for the industry.

Moreover, there has been a significant rise in bulk asset purchases by foreign investment group. Apparently, among the demand for under-5-year-old properties reverberates interest of private buyers.

What Should We Expect in 2015?

In the ‘2015 forecasts’ section, Sociedad de Tasacion predicts there will be a correction in housing supply started at end-2008 to align with the demand. ‘The weak recovery traces seen a year ago now become clearer and clearer’, the company assures.

As a result of a decrease in Spanish household wealth which will not be compensated by a 0% inflation, combined with the uncertainty lingering over the labor market, new home sales will be crippled.

On the other hand, Sociedad de Tasacion believes that new housing supply will remain considerable throughout 2015, in spite of slow production pace, whereas the demand will start to rise in line with an increase in number of quality jobs and financing.

“The trend of switching from selling to renting will continue to grow, both in case of lease-to-buy or just lease properties”, portends the appraisal firm.

 

Original story: Cinco Días (after EP)

Translation: AURA REE

ST: Housing Prices Climb Up 4.1% in Third Quarter

9/10/2014 – Expansion

After seven consecutive years of depreciation, Spanish homes became by 4.1% more expensive in reference to the same period of time in 2013. The data has been provided by appraiser Sociedad de Tasacion (ST) and it also shows that values of both new and existing properties averaged at 1.309 euros per square meter.

Housing prices increased most in case of best quality assets (up 5.7%), while units with low and average specifications appreciated by 5.1% and by 2% respectively.

In its latest ‘Quarterly Report on Real Estate Trends’, Sociedad de Tasacion estimates that in quarter-on-quarter terms, the prices fell by 1.4%. This way, current average value of the Spanish property is by 45.5% smaller than the 2007 peak number.

The study foresees pricing ‘stability’ in the next months.

By the regions of Spain, home values jumped up most in Castille and Leon (7.5%), Madrid (2.6%), the Valencian Community (1.4%), Andalusia (1.2%), Catalonia (1.2%), Murcia (1.1%) and the Balearic Islands (1%).

On the other side, they declined in Cantabria (-8.8%), Aragon (-7.1%), the Basque Country (-3.3%), La Rioja (-3.1%), Asturias (-3%), Castille-La Mancha (-2.9%), Navarre (-2.7%), Galicia (-2.5%), Extremadura (-2.4%) and the Canary Islands (-0.1%).

Speaking of the reasons, Sociedad de Tasacion explains that the rise ‘comes along with improvement in the unemployment rate and lending‘. However, these factors are still to weak to lift the market up.

At the same time, the report remarks that economic growth yet had not been reflected in households’ wealth, still fearing lack of job. Moreover, an average income person needs 7.5 years to buy an average home, while in 2007 they would need twice as much, 14.9 years.

Further into the text, the appraisal firm claims that ‘in spite of bulk housing purchases performed by foreign investment funds, property surplus is not expected to diminish promptly’.

Likewise, sales will probably keep declining for the benefit of rentals, some with purchase option.

 

Original article: Expansión

Translation: AURA REE