Tag: ST

Tinsa & Sociedad de Tasación are the Banks’ Preferred Appraisal Companies

17 May 2018 – Expansión

Last year, the banks commissioned appraisals for properties worth €200 billion. The valuation of these assets was performed by a well-nourished group of entities that have been authorised by the Bank of Spain to undertake these types of operations.

Tinsa and Sociedad de Tasación swept the board in this sector, with market shares of 28.7% and 13.9%, respectively, according to the total revenues for the sector for 2017, which amounted to €284 million, according to data from AEV, the main trade association.

The appraisal sector was particularly badly hit by the consequences of the real estate crisis, given that their valuations, which in some cases did not reflect the reality, contributed to the inflation of the real estate bubble which then burst.

The appraisals performed last year represent one third of those recorded in 2007 when the figure reached €600 billion according to data from the Bank of Spain.

There was also a lack of professionalism in this sector, on which the Bank of Spain has imposed several sanctions in recent years, in some cases on firms that have now disappeared.

More control

Following the crisis, the banks also liquidated their own appraisal companies and, since then, independence and professionalism have reigned.

“The Bank of Spain has increased its control over the sector in the last three years, something that is good news and that works in our favour”, says Juan Fernández-Aceytuno, CEO at Sociedad de Tasación. By way of example, he comments that the supervisor now “requires us to provide 350 information fields for every appraisal”. (…).

In another change, Santander commissioned its appraisals from half a dozen different companies last year, namely: Tinsa, Eurovaloraciones, Ibertasa, Tasaciones Hipotecarias, Krata and Hispania de Tasaciones.

The group explains in its accounts for last year that its strategy, when it comes to choosing these entities, is governed by “the requirements of independence, neutrality and credibility to not undermine the reliability of their valuations” (…).

BBVA works with fifteen appraisal companies including Tinsa and Sociedad de Tasación. The bank confirms that it engages these entities due to “their reputation, independence and recognition in the market, given that they are capable of providing valuations that most appropriately reflect the reality of the market in each region” (…).

Bankia is the entity that engaged the fewest appraisal companies in 2017. It hired Tinsa, Gesvalt, Tecnitasa, UVE and Arco Valoraciones. Sabadell, by contrast, reports in its accounts for last year that it worked with around 30 firms.

Original story: Expansión (by E. del Pozo)

Translation: Carmel Drake

ST: Madrid & Barcelona Sell 93% of their New Housing Stock in Just 2 Years

18 May 2018 – El País

In the cities of Madrid and Barcelona, the two main real estate markets in Spain, there are just 4,114 homes in new developments available for sale (9,920 in both provinces), the bulk of which have been put on the market within the last two years. Moreover, there are no longer many finished homes on offer, like during the years of the crisis, but rather mostly developments under construction or units that have not even been started yet, which are being offered off-plan and whose prices have risen by so much since 2016 that the supply of homes for less than €150,000 is currently insignificant.

Given the shortage of construction projects, the supply of new homes may be exhausted within eight months in the case of the Madrid region (nine in the capital) and within just under 14 months in the Catalan province (12 months in the municipal area), something that is going to accelerate the price rises seen in recent months, according to ST (Sociedad de Tasación), which has compiled a census on the developments that are currently up for sale.

Over the last two years, both real estate markets have done an about turn and not only due to the increase in prices. In the Community of Madrid, 93.7% of the stock of new homes has been exhausted since 2016, according to Sociedad de Tasación. The appraisal company registers a current supply of 6,319 homes, which represents an increase of 15.8% with respect to 2016. This calculation includes 346 homes that were already up for sale in 2016 and which have not been sold, plus 5,973 new units.

The rate of absorption in Madrid capital has been more marked, where more than 97% of the homes put up for sale over the last two years have been sold, in such a way that now there are 3,067 homes on the market (3,007 of which are new units), 42.1% with respect to 2016. 98% of this supply comprises properties that have been put on the market over the last two years.

In this new real estate cycle, the supply of finished properties has lost weight over the total, with such homes now accounting for just 7.5% of the total stock in the Community of Madrid, compared with 58.1% in 2014. 60.5% of the supply registered now corresponds to homes that have not been started yet and 32% to homes under construction. Specifically, the current supply of finished homes has decreased by 75.8% with respect to the census in 2016 and the volume of properties under construction has grown by 54%, whilst the supply of homes not yet started has risen by 75.1% (…).

In the province of Barcelona, 89.6% of the stock has been absorbed in just two years. In addition to the 289 homes that are still on the market from 2016, 3,312 new units have been identified, bringing the total current supply to 3,601 homes, 28.9% more than in 2016. And in the Catalan capital, 93.4% of the supply that has come onto the market over the last two years has been sold and today the current supply amounts to 1,047 homes. 93.2% comprise homes that have been put up for sale within the last two years.

Here too there has also been an increase in the weight of homes under construction (50.9%), at the expense of the supply of finished homes, which account for 12.4% of the total stock in the metropolitan area, compared with the 29.9% that they represented in 2016. Specifically, the current supply of finished homes has decreased by 53.6% with respect to the 2016 census, and the supply of homes under construction has grown by 65.7%, whilst the volume of homes not yet started has increased by 54.8% (…).

Larger and more expensive homes

Another feature of the new real estate cycle is that the homes for sale are larger and also more expensive than they were two years ago. In the Madrid region, homes with surface areas of between 100 m2 and 150 m2 are gaining weight, and now represent 62.2% of the total, compared with 45.8% in 2016. By contrast, homes measuring less than 100 m2 are losing weight, down from 36.1% in 2016 to 22.1%.

In terms of prices, there are increasingly fewer homes that cost less than €150,000, which have gone from accounting for 25.6% of the supply to just 15.2% in the Madrid region and from 13.6% to 9.7% in the Spanish capital. By contrast, the proportion of homes costing between €150,000 and €300,000 has increased, according to ST.

In the Barcelona metropolitan area, homes costing less than €150,000 have gone from accounting for 15.9% of the total supply to just 4.8%. And in the city itself, the appraisal company has not been able to identify any units on the market for less than €150,000. What’s more, homes costing more than €500,000 have grown from representing 24% of the total in 2016 to 39% in 2018.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake

ST: Lack of Skilled Workers Starts to Limit Construction & Threaten House Prices

18 January 2018 – Cinco Días

Without exception, all of the studies currently being published about trends in the real estate market indicate that 2018 is going to be better than the previous year. Nevertheless, the experts are warning that certain risks may lie in wait for the sector.

On Thursday, the CEO of Sociedad de Tasación, Juan Fernández-Aceytuno, presented a report compiled by his company, which forecasts that: house prices will rise by 5.5% on average this year, sales will improve by 14.1% and mortgages will increase by 9.4%.

Based on those figures, it seems that the sector is set to close the year with all of its variables growing at a strong rate. And, what’s more, with no need to talk about the generation of a new bubble, for the time being, at least. Nevertheless, Fernández-Aceytuno warns that we should not lose sight of certain indicators and concrete facts that are already starting to emerge and that may be early signs of situations from the past that nobody wants to see a repeat of.

One such circumstance is the lack of skilled personnel for construction projects that is being seen now that property development has taken off again. The CEO of Sociedad de Tasación revealed that work at some sites has been suspended due to a lack of labour, which is not only going to result in delays in the hand over of certain homes, but which may also end up leading to an increase in house prices. “Most of the best professionals that were working in the previous boom cycle have retired or retrained in other areas, which is why property developers are finding it hard to find qualified personnel for their jobs”, he explained (…).

Another risk that may lead to distortions in the proper operation of the market is the paralysis of too many urban development plans, which, in turn, leads to a shortage of buildable land for the construction of new homes. “All restrictions on the supply side end up resulting in a bubble”, said Fernández-Aceytuno. For that reason, he recommends that to the extent possible and where it is clear that demand for housing exists, it is desirable that the urban development processing times be made as streamlined as possible (…).

Regarding the current situation in the residential rental market, the report from Sociedad de Tasación warns that it is possible that the high returns that are being recorded at the moment constitute an “ephemeral” bubble, given that in some areas, we are starting to see the rise in rental prices tail off, since rent is very volatile to certain factors.

One of those is the limitation on rental prices being demanded by some of the political parties, to reflect what is happening in other European cities. “We consider that in the rental market, the path to follow cannot involve imposing limits. Each owner must be free to lease his home at the price he wants to and then comply with the law and pay the taxes that he ought to”, he said. In this sense, he defended his point that with more rental properties, Spain would be a richer country, because rental favours labour mobility and constitutes a more liquid market. However, he did demand the legal security be professionalised and guaranteed so that increasingly more companies want to invest (…).

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

ST: Costa Del Sol Accounts For Most New Homes On Mediterranean Coast

25 May 2017 – El Economista

The Costa del Sol is the stretch of the Mediterranean coast where the largest number of new homes for sale can be found, according to a report prepared by ST Sociedad de Tasación, which analyses a total of 67 towns along the coasts of Girona, Tarragona, Alicante, Murcia and Málaga.

ST has analysed 456 new housing developments in total and has identified 5,594 units for sale, along the five coasts analysed. According to the study, the average price of these homes amounts to €210,760.

In fact, the study shows that the coasts that are located towards the South of Spain have the most homes up for sale, compared with the coasts located towards the North, and it reveals that the Málagan coast has a total of 2,482 new homes on the market.

Specifically, the report highlights that along the Costa Brava, Dorada, Blanca, Cálida and del Sol, there are 5,594 new housing units in total, however, they are not distributed in a homogeneous way along these coastlines. In addition to the homes in Málaga, the other dwellings are located in Alicante (2,100 homes), Tarragona (378 homes), Murcia (345 homes) and Girona (279 homes).

ST also said that the supply is unequal within these coastal regions and that Murcia and Málaga are the areas where the available housing supply is distributed in the most balanced way.

The pending supply for sale does not exceed 70% of the properties developed, although that percentage is higher in Altafulla, Cambrils and Cunil, all towns in Tarragona. Along the coasts of Girona and Alicante, only two towns in each one, Blanes and Finestrat, have a volume of supply that is similar to these towns.

The study reflects that there are four coasts with an average house price of between €150,000 and €200,000, whilst in the case of the Costa del Sol, that figure soars to €353,000.

Although on the Costa Dorada and the Costa Cálida, there is not a single dwelling being sold for €500,000, on the Costa del Sol, 287 homes are on the market for that price, accounting for 12% of the total. Moreover, that figure decreases to 4% in the case of the Costa Blanca and 2% on the Costa Brava.

The average surface area of the homes for sale is 112 m2. Nevertheless, the homes on the Costa del Sol exceed that average (145 m2). Meanwhile, the towns on the Costa Brava (100 m2) offer the smallest homes in general, followed by those on the Costa Blanca (102 m2) and the Costa Brava (103 m2).

In terms of the type of home, only 60% of the dwellings on each coast are family homes and almost none of the properties are studios (i.e. few have no bedrooms), given that most homes typically have one or two bedrooms.

Taking into consideration the construction status of the homes, ST has recorded that the majority (60%) of the properties up for sale have already been completed, more than 25% are still under construction and 10% have not been started yet.

Original story: El Economista

Translation: Carmel Drake

ST: House Prices Rose By 2.5% In 2016

4 April 2017 – El Mundo

The average price of housing in Spain experienced an average annual increase of 2.5%, to reach €1,469/m2, according to the Real Estate Sector Trend Report from ST Sociedad de Tasación. In the second half of 2016 alone, house prices rose by 1.5%. Despite this YoY increase, the average salary required to acquire a home remained stable at 7.4 years.

According to Juan Fernández-Aceytuno, Director General of the appraisal company, “the positive variation experienced over the last 18 months confirms the recovery that we have been predicting since 2015”. “Nevertheless”, he clarified, “the average behaviour of prices is not the same across every province”.

In this way, by province, Barcelona experienced an annual increase of 5.5%, followed by the Balearic Islands, with an increase of 4.6% and Madrid, 4.4%. By contrast, Teruel with a reduction of -2.1% and Álava with a fall of -1.6% experienced the highest price decreases, followed by Pontevedra (-1.4%), Zamora (-1.3%) and Burgos (-1.1%).

By autonomous region, the price of new and second-hand homes are still decreasing in some areas, led by Asturias with a decrease of -0.5%, followed by La Rioja (-0.4%) and Castilla y León (-0.3%). Meanwhile, Cataluña (4.8%), the Balearic Islands (4.6%), Madrid (4.4%) and Melilla (3.3%) recorded the highest annual increases.

7.4 years of salary to buy a home

ST Sociedad de Tasación’s Real Estate Effort Index, which defines the number of years of full pay that an average citizen needs to buy an average home, did not change, remaining stable at 7.4 years in the first quarter of 2017.

The Balearic Islands continued to be the region where it takes the longest to acquire a home (14.4 years), although that figure has decreased with respect to 2016. By contrast, La Rioja is the region where it is easiest to access housing (4.9 years), followed by Murcia, where it takes 5.1 years of full pay to buy a home.

Meanwhile, the Accessibility Index prepared by ST Sociedad de Tasación reflects a slight improvement at the state level for the third consecutive quarter. Based on a benchmark of 100 points for those cases in which the capacity for indebtedness is sufficient, the average level in Spain in the first quarter of 2017 amounted to 107 points, three points above the level in the previous quarter. The state average remained above the minimum salary level for the acquisition of an average home for the fifth consecutive quarter.

By autonomous region, Madrid, Cataluña and the Balearic Islands continued to register insufficient levels for the acquisition of a home, with Cantabria moving into positive territory.

Confidence increases in the real estate sector

ST Sociedad de Tasación’s Real Estate Confidence Index continued its upward trend during the first quarter of 2017, registering an increase of 0.9 points, to reach 55.4 points, out of a total of 100. The index hit its lowest ever value in December 2012, at 30.6 points.

By autonomous region, La Rioja exceeds sixty points, with 60.2, followed by Madrid (58.4) and the Balearic Islands (57.6), which reported the highest confidence indices. By contrast, Castilla y León (50.7), País Vasco (51) and Murcia (51.2) recorded the lowest levels.

Original story: El Mundo

Translation: Carmel Drake

ST: New Home Prices Rose In Every Regional Capital In 2016

4 January 2017 – Expansión

According to Sociedad de Tasación, the price of new homes rose by 3.3% in 2016. It is the largest increase recorded since 2007 when, at the height of the real estate bubble, they rose by 5.1%. The price of new homes rose in every provincial capital and, for the first time since the crisis, “the rising trend was completely generalised”. Nevertheless, the price rises were moderate in almost every city. They only really stood out in Barcelona, with an increase of 6% and in Madrid, with a rise of 4.9%. Both cities continue to be the engines of growth in the sector.

The average price of new homes in Spain’s provincial capitals amounted to €2,120/m2 in December 2016 (up by 1.9% compared to the previous half year). The value of a typical 90. m2 home in the provincial capitals rose to €190,800. In other cities that are not provincial capitals, the average price of new homes amounted to €1,555/m2 in December, down by 26.6%.

“We think that 2016 was the year during which prices bottomed out, the cycle changed and the sector moved from stability to recovery, supported by price increases, transactions, the reactivation of off-plan house sales, the granting of mortgages and a decrease in the default rate. That makes us think that 2017 could be a good year for the real estate sector”, said Juan Fernández Aceytuno, Director General at Sociedad de Tasación.

Although all of the capital cities have left their losses behind, we are still seeing a two speed recovery in the residential sector. On the one hand, we have the large centres of demand and the tourist areas. On the other hand, we have the areas with the highest volumes of surplus new homes for sale, which still have several years of property digestion activity ahead of them. (…).

More confidence

The index of confidence in the evolution of the real estate sector that Sociedad de Tasación compiles stands at 54.5 points and is continuing to rise from its neutral position of 50. This means that the indicator has grown by 10 points in two years, from 44.5 at the end of 2014. La Rioja (57.9), the Balearic Islands (57.9) and Madrid (56.9) have the highest confidence indices. Castilla-La Mancha (50.9), Castilla y León (50.8) and País Vasco (49.3) have the lowest.

Meanwhile, the appraisal company’s real estate effort index amounts to 7.4 years salary for the acquisition of an average home. The Balearic Islands is once again the autonomous region where buyers need the longest time to acquire a home – 15.8 years – and La Rioja the region where buyers take the least time – 4.6 years.

Most buyers are not new households, but demand is being nourished, above all, “from investors, in particular from people looking to buy to rent or reposition themselves”, according to the Director General of the appraisal company. As such, “the challenge is to analyse in detail the demand and understand why the cohort that makes up the sociodemographic profile aged between 25 and 35 years are not buying homes at the moment”, says Fernández Aceytuno. “It may be due to job instability, wages, geographic mobility, sociodemographic changes…but really, it is more important that we analyse who are not buying homes than who is”, he added.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

ST: New House Prices Rise By 4% In MAD & BCN

30 June 2016 – El País

According to ST Sociedad de Tasación, the average price of new homes grew by 4% YoY in June in the cities of Madrid and Barcelona. They were the two provincial capitals with the highest new home price rises in the last year. These price increases, which are not being seen in other capital, have been driven by the shortage of new home stock, explain sources at ST. “Our analysis of this data and of the increasing trend observed since June 2015 allows us to predict that Barcelona and Madrid are going to act as the drivers of the recovery process for new house prices, albeit at a slow pace”.

Barcelona is the provincial capital that recorded the highest new house prices, with an average of €3,390/sqm. Prices grew there by 2.2% during the first half of 2016. The YoY price increase in Barcelona was 4.1%, the highest of all of Spain’s provincial capitals.

By district, Gracia recorded the highest increase in new house prices, with a rise of 7.72%. It was followed by the neighbourhoods of Sarria-Sant Gervasi, with 6.94% and Sant Marti, with 6.38%. At the other end of the spectrum, the districts with the lowest YoY price increases were Ciutat Vella (1.33%), Sant Andreu (1.93%) and Nou Barris (2.33%).

And not only did the district of Sarria-Sant Gervasi in Barcelona record one of the highest price rises, it also registered the highest average price per constructed square metre, at €5,672/sqm. The districts of Les Corts and L’Eixample were ranked in second and third place, respectively, in terms of average prices, with values of €4,610/sqm and €4,511/sqm. By contrast, the districts with the lowest average prices were Nou Barris (€2,721/sqm), Sants-Montjuic (€3,024/sqm) and Sant Andreu (€3,062/sqm).

In Madrid, a new home costs €2,886/sqm on average

In the case of Madrid, new house prices have grown by 4% with respect to the previous year and by 2.1% during the first half of 2016. That takes the average price of new homes in Madrid to €2,886/sqm.

The ranking for the YoY variation in new house prices is headed by Ciudad Lineal, which saw growth of 5.8%. It was followed by Barajas, with 5.7% and Arganzuela, with 5.4%. At the other end of the spectrum, the neighbourhoods with the lowest YoY price variations were Hortaleza (0.8%) and La Latina (1%), followed by Tetuán (1.8%).

In terms of the average price of new homes, Salamanca was once again the most expensive district in the capital, with an average price of €4,799/sqm, followed by Chamberí (€4,626/sqm) and the Centre (€3,939/sqm). By contrast, the neighbourhoods of Vicálvaro, Villaverde and Villa de Vallecas registered the lowest average new home prices, of €1,856/sqm, €1,883/sqm and €2,203/sqm, respectively.

Original story: El País (by S.L.L.)

Translation: Carmel Drake

ST: Barcelona’s New Home Supply Could Run Out Within 12 Months

16 June 2016 – El Mundo

Sociedad de Tasación has published its ST New Home Census for 2016 for the province of Barcelona and Barcelona Capital. The company has provided the market with complete and detailed information about the supply of unsold new homes in the region, whereby updating the ST Census for 2014 to include the new supply of homes constructed during the last two years. In addition, it includes a breakdown of the properties by construction phase, price and surface area.

The study contains analysis of the municipalities that have more than 50,000 inhabitants in the province of Barcelona, as well as specific data about the capital. The municipalities analysed together account for almost 65% of the population and stock of existing homes in the region.

According to the report, currently only 725 of the 2,719 new homes registered for sale in 2014 are still on the market, which implies a reduction in the stock of 73.3%, in just two years. Moreover, 2,068 new units have been identified, which means that in total the current supply adds up to 2,793 homes. That figure represents a net stock increase of 2.7% compared with the ST Census for 2014.

In light of this data, ST Sociedad de Tasación’s Director General, Juan Fernández-Aceytuno, said that “if this rate of absorption of the new home stock continues, then the current supply could run out within 12 months in the province of Barcelona and within 14 months in the capital”.

In the city of Barcelona, only 215 of the 917 new homes up for sale in 2014 are still on the market, which means that 82.5% of the supply has been sold in two years. As well as the homes that have been on the market since 2014, 857 new homes have been put up for sale in the last two years, which means that the current supply amounts to 1,072 homes, a net increase in the total stock of 16.9% with respect to the ST Census for 2014.

The supply of off-plan homes increases

Fernández-Aceytuno also highlights changes in the composition of the housing stock: “As far as the construction phase is concerned, the supply of homes that have not been started has grown by 212% in the municipalities of Barcelona that have more than 50,000 inhabitants. As such, there has been a 45% reduction in the volume of finished homes included in the stock in 2016, which amounts to 834 units in total”, concluded Fernández-Aceytuno.

In the city of Barcelona, there has also been an increase in the number of off-plan homes, in this case by 150%, with respect to the data in 2014. Thus, whilst in 2014, the supply of finished homes accounted for 50.4% of the total, in 2016, they represented just 19.2%.

Increases in the average house size and the average price

The study reflects an increase in the average size of homes. Whilst in the ST Census for 2014, homes measuring less than 100 sqm accounted for 67.7% of the supply, they now represent just 47.6%.

Similarly, in 2016, the average price of new homes is higher in 2016 than in 2014. As such, homes worth more than €300,000 have increased from representing 26% of the stock in 2014, to 35.3% in 2016. (…).

Original story: El Mundo

Translation: Carmel Drake

Sociedad de Tasación Predicts RE Recovery From Mid-2017

25 April 2016 – El Economista

ST Socided de Tasación forecasts that 2016 will mark the year of house price “stabilisation” and the start of improvements in the sector, however the recovery in real estate activity, and therefore in prices, will not come until the middle of 2017.

Those were the predictions made by the CEO of ST Sociedad de Tasación, Juan Fernández-Aceytuno, in an interview with Europa Press, in which he explained that in order to talk about a recovery in the real estate sector, the number of mortgages (which are currently growing at a YoY rate of 35%) have to get closer to the number of house sales (which are increasing by 20%), and he estimates that there is still “between 12 and 18 months” to go in that regard.

Fernández-Aceytuno believes that there is still “potential” for the creation of households, mortgages and transactions, given that this year, it is estimated that 300,000 new mortgages will be granted, compared with 1.35 million in 2006, and around 450,000 transactions will be closed, a figure that peaked at 900,000 during the real estate boom. (…).

He considers that for a country like Spain, a “very reasonable balance” would be 650,000 transactions per year, which would represent a “fabulous” market.

For the time being, the surveyor says he is observing “stabilisation” and the “start of the recovery” in terms of prices, which is now extending to all provinces, and is being led by the autonomous regions of Madrid, Cataluña, the Balearic Islands and País Vasco.

Eight-year upwards cycle

The CEO of Sociedad de Tasación explained that real estate cycles in Spain seem to span periods of 16 years, eight years of decreases and eight years of increases, which means that, in theory at least, the country can now look forward to eight years of increases, although “ it would be better if the growth were not so marked, but more sustained”. (…).

According to Fernández-Aceytuno, the Socimis “will be a very significant investment engine in the rental market”; he also sees a “great opportunity” in urban renovation and regeneration. The “big question” in this recovery process is whether the generation of “millennials” will opt to buy homes or to rent, a market that has been booming in recent years.

“Over the medium and long term, I expect to see a reasonably good market. The growth rate will depend on many factors, but I am reasonably optimistic”, he added.

Uncertainty affects investments, but not purchases

In terms of the impact of the political uncertainty on the real estate market, the CEO of Sociedad de Tasación considers that for now, at the micro level, the repercussions are “limited” and are not delaying purchase decisions, but he warned about the effect on “major investments, shopping centres and funds” as a result of the regulatory risk surrounding urban planning. (…).

Original story: El Economista

Translation: Carmel Drake

ST: Its Still Too “Early” To Talk About A “Complete Recovery”

21 April 2016 – El Economista

The CEO of ST Sociedad de Tasación, Juan Fernández-Aceytuno (pictured above), said on Tuesday that, despite the clear stability that we are seeing in terms of house prices, it is still “early” to talk about the “complete recovery and normalisation” of the market, and he warned that the recovery will only be an “objective” for as long as the net mortgage volume balance continues to decrease.

Those were the words of Fernández-Aceytuno during the opening session of the XXIII Meeting of the Finance Sector, an event organised by Deloitte, ABC and ST Sociedad de Tasación, at which he presented the five key indicators of the real estate sector.

Fernández-Aceytuno indicated that although there has been a double-digit increase in the number of appraisals commissioned by financial entities to support mortgage requests, the volume of mortgages granted in 2015 was “similar to the volume granted in 1998”, i.e. the lowest level in the series detailing mortgage activity prepared by the Spanish Mortgage Association.

Moreover, he said that in 2015, cement consumption amounted to 11.5 million tons, “similar to the levels seen in the 1930s and almost six times lower than the historical peak”.

“It would be interesting to validate and understand that real estate cycles in Spain are 16 years long, eight years of price and activity decreases, followed by eight years of rises”, said Fernández-Aceytuno, before going on to list the five key indicators for determining at which point we are in the cycle.

The five key indicators of the real estate sector

The first is the relationship between mortgages and transactions, regarding which he noted that during times of growth and recovery, the number of mortgages exceeds the number of transactions. “In Spain, that relationship was reversed in 2011; the good news is that since 2015, the number of mortgages granted has grown more quickly than the volume of house purchases”, he said.

Similarly, he indicated that the relationship between the percentage of appraisals commissioned by financial institutions for own assets and loan collateral has varied “significantly” from those commissioned by end clients to support new mortgage applications.

In terms of the creation of new households, Fernández-Aceytuno highlighted that, according to sources at La Caixa, almost 75,000 new households were created in Spain last year, which represents just 20% of the historical maximum. According to the Bank of Spain, the reference figure should amount to around 250,000 new households per year.

Similarly, he said that the New Home Census for 2016 compiled by ST-Sociedad de Tasación reported around 5,400 new homes for sale, compared with the 45,000 resulting from the calculations published by the Ministry of Development.

The variables that determine this difference are: the age of the home, its rental yield and the preference of property developers and banks to sell their homes in more favourable economic environments.

Finally, in terms of the evolution of outstanding mortgage balance, he said that currently the figure for the volume of loans being repaid exceeds the figure for the granting of new mortgages. “Although the latter increased at a higher rate in 2015, for as long as the net mortgage volume continues to decline, the recovery will just be a goal”.

Original story: El Economista

Translation: Carmel Drake