Tag: two-speed recovery

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

Tinsa: House Prices Rose By 2.4% YoY In September

10 October 2016 – Expansión

House prices are rising at a strong pace, residential sales are recovering and mortgages are coming back, timidly, along with cranes. The residential market has left its worst years behind it and is setting itself up for a robust recovery, without any signs of the excesses that created the real estate bubble.

Statistics published on Friday confirm that the wind is blowing in the right direction for the real estate sector. The average value of free (unsubsidised) homes grew by 2.4% YoY in September, according to Spain’s largest property appraiser, Tinsa. The cumulative increase in prices during the first nine months of the year amounts to 2.9%.

At the same time, sales of unsubsidised homes also rose in August by 19.9% YoY, driven by the strong performance of the second hand segment, which accounted for 82.8% of the market, according to INE. The number of operations involving new homes rose by 3.3%, whilst the number of second-hand home sales rose by 24.6%.

In August, 35,501 residential properties were sold, up by 7.3% compared to July. The cumulative increase during the first eight months of the year amounted to 14.8%.

Nevertheless, the experts warn that “the monthly variation, albeit positive, is not sufficiently high following the decrease registered in the previous month”, said Manuel Gandarias, Director of Research at Pisos.com. Why? Because in the house sales figures registered in August included operations outstanding from July, due to a Supreme Court ruling regarding late payment interest, which means that the increase should have been greater. “In September, we will also see quite a bulky increase”, added Gandarias.

“The crisis has left a two-speed real estate market and the behaviour of prices and sales will continue to be very uneven”, warned Beatriz Toribio, Head of Research at Fotocasa. The autonomous regions that have seen the highest increases in house sales are the Balearic Islands (49.2%), Cataluña (+41%) and Navarra (+38.1%) Meanwhile, Murcia (-5.2%), Galicia (+4%) and the Community of Madrid (+10.4%) recorded the lowest increases. “The worst is behind us in Cataluña, Madrid, the Balearic Islands, the Canary Islands and most of the Mediterranean Coast, but the outlook is not nearly as encouraging in the rest of the country”, said Toribio.

According to Tinsa, prices are growing by more in the Balearic and Canary Islands (+4.4%) than in the rest of Spain, although they are followed very closely by the Mediterranean Coast (+4.3%). In the major cities, prices rose by 2.5% in September. “The worst is behind us, but the recovery will be slow”, summarised Toribio.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Tecnocasa: Second-Hand House Prices Rose By 8% In H1

7 September 2016 – El Mundo

The average price of second-hand housing in Spain rose by 7.99% YoY during the first half of 2016, to €1,666/sqm, according to the XIII Report about the residential market, prepared by Tecnocasa and the University of Pompeu Fabra (UPF) using sale/purchase and mortgage data from the real estate company.

Despite the significant increase, this average price is still well below the maximum values that the market reached at the end of 2006 and the beginning of 2007, when the average cost per square metre of second-hand homes amounted to more than €3,500. (…).

The city of Barcelona, which saw a price rise of 9.45%, led the increases during the first half of 2016, followed by Málaga (9.21%) and Madrid (9.03%). In this way, the cost per square metre rose to €2,443/sqm in Barcelona, to €1,044/sqm in Málaga and to €1,835 in Madrid.

In this regard, Tecnocasa notes that “we are seeing a two-speed recovery”, given that prices in cities such as Guadalajara, Sevilla, Zaragoza and Valencia increased by less than 2% (during the same period).

At a press conference held to present the report, the Director of the Department for Analysis and Reports at the Tecnocasa Group, Lázaro Cubero, explained that rental prices are also increasing, in the same proportion, and the average mortgage is also rising (€91,808), which represents an increase of 9.8%, although still represent less than half the lending figures in 2007 (€185,462). In this sense, it is worth remembering that the average monthly repayment amounts to €367.

Cubero stated that prices are still “attractive” – they are 52% lower than they were in 2006 for Spain as a whole – and financing conditions are very favourable, thanks to low interest rates, at a time when vendors are still having to apply discounts to their initial asking prices to achieve a sale.

The CEO of the Tecnocasa Group, Paolo Boarini, indicated that financial institutions are still behaving in a conservative way when it comes to granting mortgages: they are granting 73% of the appraisal value, and “it is very hard for people with temporary contracts to obtain a mortgage; self-employed people also face challenges”.

Meanwhile, for the Professor of Economics at the UPF and the coordinator of the report, José García Montalvo, the increase in the uptake of fixed-rate mortgages is “a significant change in the right direction”. He criticised Spain in this regard, stating that variable rate mortgages do not account for 95% of the total market in any other country, given that this means all of the risk in terms of interest rate fluctuations is transferred to the client. (…).

On the other hand, the Tecnocasa Group brokered 4,327 house sales in Spain during the first half of the year, up by 22% compared with the same period in 2015, as well as 1,445 mortgages, up by 28%, through its network of 465 offices (19.23%) and 2,000 sales agents. (…).

Original story: El Mundo

Translation: Carmel Drake

INE: 23,607 New Mortgages Were Granted In April

30 June 2016 – El Economista

Residential mortgages recorded strong growth once again in April, providing further proof that the recovery is well underway in the real estate sector in Spain, where prices are rising once again in the major cities. Forecasts indicate that 300,000 mortgages will be granted in total this year, although it is hard to believe that those figures will ever return to the level seen during the period 2005-2007 of 100,000 mortgages per month

According to the National Institute of Statistics (INE), 23,607 residential mortgages were recorded in the property registers in Spain in April, up by 24.6% compared with the same month in 2015 and by 2.7% compared to March.

That made it the highest YoY growth rate since August 2008, well above the increase of 14.5% recorded in March. The average residential mortgage in April amounted to €108,354, up by 5.1% compared to a year earlier. (…).

The banks are playing their part

According to Beatriz Toribio, Head of Research at Fotocasa, “Banks are very interested in granting mortgages at the moment and that is boosting the market at a time when prices are stabilising, which is also encouraging transactions”. (…).

The portal Idealista agrees with this view of “normalisation” in the sector, which is being supported by low underlying interest rates in the Eurozone.

Nevertheless, they highlight that the seasonality caused by Easter may be distorting the April figures and that in any case, the mortgage business is continuing to narrow given that more mortgage repayments are being registered still than new loans being granted.

In summary, Fernando Encinar, Head of Research at Idealista, says that “if we continue at this rate of growth, it is very likely that we will close the year with around 300,000 mortgages granted, well above the figure of 245,000 recorded in 2015”.

Despite the improvement, the 23,607 new mortgages granted in April fall well short of the more than 100,000 mortgages that were granted per month, on average, during the period 2005-2007.

Higher growth in Barcelona and Madrid

(…). Nevertheless, the improvement is very uneven and, whilst in the large cities, in particular, in Madrid and Barcelona, prices bottomed out several months ago, in other areas (such as small towns, rural areas and the east coast), the recovery is not being seen yet.

On Wednesday, ST Sociedad de Tasación published a report showing YoY price increases of at least 4% in June in Madrid and Barcelona, the cities that reported the highest increases of all of the provincial capitals.

According to the study, the price increases in Madrid and Barcelona are due, at least in part, to the scarcity of new housing stock. The study concludes that “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”. (…)

Nevertheless, the ratings agency Moody’s warned that the recovery could be “limited by various uncertainties and risks”, including the abundant stock of homes that the banks still own and the uncertainties regarding the formation of a government in Spain following the second round of general elections on 26 June. (…).

Original story: El Economista

Translation: Carmel Drake

CBRE: Experts Expect 100,000+ Homes To Be Built In 2016

20 January 2016 – Cinco Días

The property sector, one of the causes of the crisis, and certainly one of the sectors that was hardest hit by it, appears to have bottomed out. At least that is the opinion of 100 executives from the real estate sector interviewed by the consultancy CBRE for its “Trends in 2016” barometer, published yesterday.

82.9% of the experts consulted think that the residential sector has now bottomed out in terms of price decreases. Of those, 77% expect the cost of house purchases to grow by up to 10%.

“We are seeing a two-speed market when it comes to the recovery of prices. Prices in Madrid, Barcelona and the Costa del Sol are increasing, along with those in certain large provincial capitals”, says Lola Martínez-Brioso, Head of Research at CBRE. For example, prices in Madrid are increasing by 5%. “New developments have more opportunities in those cities where there is greater demand and at the same time, the stock of empty homes is smaller”, she adds.

According to this barometer, 39.5% of the experts point to the development of residential properties as one of the best segments for business opportunities, double the number that thought the same in this report a year ago.

Moreover, these experts predict a surprisingly high volume of new construction. 72.3% of the executives expect that more than 100,000 new homes will be constructed this year. Of those, 19.7% believe that this figure could even reach 250,000 new homes.

These forecasts represent a stark contrast to the reality of 2015. According to the Ministry of Development, during the 10 months to October 2015, construction began on 39,871 homes, which means that by year end, that figure may have reached 50,000. Nevertheless, the forecasts according to the barometer show that this rate of new builds will be at least double in 2016. “For the first time since 2007, we consider that residential development is the business with the greatest potential”, says Martínez-Brioso.

In the past, the record high was recorded in 2006, when more than 865,000 new homes were constructed in just one year. The last time more than 100,000 new units were constructed (in one year) was in 2009 (when 110,849 homes were built, according to the Ministry of Development).

One of the reasons behind this trend, according to CBRE, is the entry of foreign capital into property development in Spain, such as the case of the fund Lone Star, which acquired the real estate company Neinor last year and now plans to invest €1,000 million in land and new builds. (…).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Outlook 2016: House Prices Will Rise By 7% & Sales By 17%

28 December 2015 – Expansión

(…). According to the XXII edition of the Real Estate Pulsometer published by the Institute of Business Practice (IPE), the outlook for 2016 is promising. Next year, house prices will rise strongly (by 6.6%), sales will increase by 17.2%, construction of new homes will rise by 12.2%, mortgage lending for urban properties will increase by 16% and stock will decrease by 24.7%.

In addition, the report forecasts a gradual recovery in the rental market, a sharp increase in yields on housing and a full-blown recovery in the non-residential sector, which has broken records in 2015 and on course for a positive 2016, with fewer operations but higher prices.

The most tangible indicator of the real estate recovery will be “the increase in the sales of homes, offices, warehouses, retail premises and land (especially urban)”, says José Antonio Pérez, Director of the Real Estate Department at IPE and the author of the report. (…). We expect to see around 820,000 operations closed in total in Spain in 2016, which represents an increase of 8.1% with respect to  2015 and 23.7% more than in 2014.

Increases across all regions

More than half of the properties sold will be homes. Specifically, next year, 481,500 homes will be sold, i.e. 17.2% more than in 2015 and 50.7% more than in 2014, according to the study, prepared using data from the MAR Real Estate network of estate agents and the Network of Qualified Real Estate Advisors, cross-checked against official figures from INE, the Ministry of Development, the registries and the notaries.

Sales are expected to grow by the most in País Vasco (by 26.8%) in 2016, followed by the Balearic Islands (24.5%), Madrid (23.5%) and Cataluña (22%). Only Castilla-La Mancha is expected to experience a decrease next year: operations will decrease by 2.4% in that region, which has the highest volume of stock per capita in Spain.

In other words, the recovery will continue to take place at two speeds, but the differences (between the speeds) will be less marked, in the sense that, although we will see different speeds, improvements will be seen across almost all of Spain.

In the context of more transactions and increased mortgage lending, house prices will increase significantly. On average, by 6.6%. If we also take into account non-residential assets, property prices will increase by 8.17%, on average.

The market for new builds will also be affected. According to the Pulsometer, cranes will return to our cities, albeit gradually. Specifically, construction permits (which indicate future construction activity) will increase from 58,636 in 2014 to 82,682 in 2016. Up by 41% in two years (in 2015, they already increased by 9% YoY). Moreover, construction will begin on 39,000 residential properties in 2016, up by 12.2% compared with 2015 (34,700). (…).

The changes will also help to reduce the stock of unsold new properties. This surplus amounts to 433,583 homes at the end of 2015. In 2016, a quarter of that supply will be used up, taking it down to 326,295 units. That figure represents less than half the number in 2014 (675,945), according to the IPE’s study.

More mortgages

The real driver behind this consolidation in the residential market is financing. Mortgage lending for urban properties (in other words, not only homes, since the report does not break down non-residential financing) will amount to 426,647 (individual mortgages) in 2015, up by 23% compared with 2014. The figure for 2016 will increase again to 494,890, i.e. 16% more than this year. (…). The average mortgage in 2016 (€122,500) will be higher than since 2011 (€124,862). (…).

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

RE Portals Predict House Price Rises In 2016

11 December 2015 – El Economista

Experts at the real estate portals agree that the data published last Thursday by Spain’s National Institute of Statistics (INE) is positive. It shows a YoY increase in house prices of 4.5% during the third quarter, the highest since the start of the crisis.

Moreover, the experts consider that, although the recovery in the residential sector is not homogenous across the whole of Spain, it is likely that price increases will be seen in all regions next year.

The Director of the Research Office at pisos.com, Manuel Gandarías, said that “prices will begin to increase across the board in 2016, after the areas with limited supply and high demand finished their downwards course months ago”.

“The overvaluations experienced in certain towns have all but adjusted to the new pace in the market, and few locations will see notable decreases, given that an equilibrium has now been achieved”, he added.

Meanwhile, the Head of Research at Fotocasa, Beatriz Toribio, believes that INE’s data “reflects that the housing sector has now left behind the large price decreases”, but she warns that “that does not mean that prices have bottomed out”.

“Over the next few months, we will see fluctuations characteristic of the normalisation that is happening in the sector, and it will become more apparent that the sector is recovering at two speeds, given that whilst in certain areas, sales and prices are on the rise, in others, the trend will continue to decrease for quite some time”, she added.

Sales are also normalising

Similarly, the Head of Research at Idealista, Fernando Encinar, said that the price data from INE “signals the normalisation of the sector”. (…).

The Ministry of Development also published data on Thursday about house sales, which showed that the number of transactions increased by 16.3% during the third quarter, to 93,528 units, the highest volume for that period since 2009. Encinar believes that “this is good news, although not a surprise for the sector”.

“The data also confirms the forecasts that the sector is going to normalise at two speeds, with operations growing by more than 20% on a YoY basis in some regions, and the rate of increase barely exceeding 6% in others”, he said.

Original story: El Economista

Translation: Carmel Drake

Investment Funds & Socimis Revolutionise RE Sector

26 October 2015 – Expansión

The real estate sector is recovering well. During the first nine months of 2015, purchases of offices, commercial and logistics assets, hotels and residential properties amounted to €10,800 million, representing an increase of 57% compared with the same period last year. After more than five years of severe economic difficulties, the return of investment, at the hands of investment funds and Socimis has breathed a new wave of optimism into the sector.

“After a really tough economic crisis, we were almost in a coma and the arrival of these funds is invigorating the market”, said Juan Antonio Gómez-Pintado, President of the Association for Real Estate Developers in Madrid (‘Asociación de Promotores Inmobiliarios de Madrid’ or Asprima), who together with Rafael González-Cobos, President of Grupo Inmobiliario Ferrocarril and Gecopi; Alberto Fernández-Aller, Corporate Director of Prinex Real Estate; and Manuel del Pozo, Assistant Director of Expansión, were responsible for opening the forum ‘The New Era of the Real Estate Sector in Spain: Investment funds and Socimis’.

The event, organised by the newspaper Expansión, in collaboration with Drago Capital, Gómez-Acebo & Pombo, JLL, Neinor Homes and Merlin Properties, and with Prinex as the technological partner, served to highlight the evolution of the market in recent years and the impact the Socimis have had on the strong investment figures recorded in the sector.

46% of the capital invested in Spain so far this year has come from Socimis, an investment vehicle inspired by the REITs in the USA, first launched in the 1960s, which did not arrive in Spain until 2009. As the Corporate Director of Prinex Real Estate explained, they are “a mechanism that allow us to hold much more open asset portfolios, without any major legal or regulatory obligations and with great tax advantages”.

Partnerships

Moreover, the entry of international capital is also helping to professionalise the sector, as well as to support the recovery of Spanish property developers and real estate companies, hit hard by years of paralysis and lack of investment. “All of the funds coming into Spain are looking for support from companies that already know the environment. They are using their capital to undertake operations with Spanish developers”, said Fernández-Aller. “They generate capital movement, investment and jobs. The Socimis are helping to create a professionalised stock of homes for rent”, added the President of Grupo Inmobiliario Ferrocarril. (…).

Meanwhile, the participants highlighted the threat that political instability poses to the recovery of the real estate sector. One example, they indicated, is Madrid, where all of the major urban planning operations (Canalejas, Chamartín and Edificio España) are currently on hold.

Large cities

The recovery of the real estate market is happening in a very uneven way and, for the time being, is limited to the major cities only, such as Madrid and Barcelona, and some coastal regions. (…).

Meanwhile, Juan Velayos, CEO of Neinor Homes, emphasised the profound transformation that the Spanish real estate market has experienced over the last 18 months and said that he was convinced that the mistakes that led this sector – which accounted for 25% of the country’s GDP at its height – to the brink of disaster, will not be repeated.

“What we are seeing in Spain is an absolute transformation of the industry. I do not think that the banks will let what happened before with the RE bubble happen again. We are not going to see any projects without equity. It is going to be a sector that, for the first time, builds what customers actually want. If we do not understand that (basic premise), then customers are not going to buy homes from us”, concluded Velayos.

Original story: Expansión (by Javier G. Fernández)

Translation: Carmel Drake

Barcelona, Madrid & Costa Del Sol Lead Residential Recovery

26 October 2015 – Expansión

Two terms are key in the residential market: “trend” and “it depends”. The first has a clear rationale: investment in housing is a long-term phenomenon and as such analysis should be kept as far away from the short-term as possible. The second serves as a wildcard, in one of the most fragmented markets of all. For example: Is now a good time to invest in a home? Well, “it depends” on where, because the real estate recovery is happening at, at least, two speeds.

On the one hand, we have medium-sized cities with a lot of stock and less established areas, which are weighing down on the results. On the other hand, we have the large real estate centres and main tourist destinations, which are experiencing a resurgence.

According to a survey conducted by the Network for Qualified Property Consultants (RAIC or ‘la Red de Asesores Inmobiliarios Cualificados’) for Expansión, 73.9% of the professionals in the sector think that the three main leaders of the real estate recovery will be Madrid, Barcelona and the coastal regions.

17.39% believe that the leaders of the real estate recovery will be Barcelona and Madrid only, whilst 4.35% put thier money on the cities in the north of Spain. A similar percentage back the Mediterranean Coast.

Madrid and, above all, Barcelona, are experiencing a new period of real estate expansion. House prices increased by 7.4% in Barcelona during Q3 2015 and by 0.2% in the capital, according to Tinsa.

The third most preferred region for investment, since it is recovering so well, is the Costa del Sol, which, unsurprisingly, is regarded as the “leading indicator” of the sector. When prices rise in Marbella and the surrounding area, prices in other areas tend to follow suit.

Javier García-Mateo, Partner in the Financial Advsiory team at Deloitte explains: “Crises always start on the coast, but so too do the recoveries, above all on the Costa del Sol. It was in Marbella that we first began to see price decreases in 2007”. He considers that now is a “good time” to buy on the coast of Malaga. “And the feeling there is even better than in many of the major cities. The coast is a much more volatile market, where the decreases are very acute, but so too are the increases. And demand there is European, not just Spanish”.

Foreigners are the main players. José Antonio Pérez, Professor of Real Estate at IPE, says that purchases by foreigners “are growing twice as quickly as those made by Spaniards, on the coast”. “For the most recent developments sold off-plan in the Costa del Sol and Levante, more than two thirds have been bought by citizens with 12 different nationalities; they demand and pay more, and almost always pay in cash”, added Pérez.

The coast in Alicante is starting to recover strongly too, according to Jorge Ripoll, Head of Research at Tinsa, the largest appraisal company in Spain.

The consultant José Luis Ruiz Bartolomé emphasises another major focus of the residential growth: the metropolitan areas of the large cities. “Opportunities in the labour market are clearly found in Madrid, Barcelona, Valencia and other large cities, and that is leading to migration, particularly young people, to the peripheries of these cities”, he says. “That is where homes need to be built”, he adds.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Fitch: House Prices Are Bottoming Out

24 March 2015 – Idealista

…but no rapid rises are expected.

The ratings agency Fitch considers that the decrease in house prices in Spain is coming to an end, but warns that the recovery will be slow. According to the company, one of the main reasons for the improvement in prices is the return of mortgage lending.

Fitch says that Spain faces a slow recovery in the housing market. It considers that prices have practically bottomed out, but rules out any rapid price increases. In fact, it points out that the high level of unemployment, together with the high supply of unsold homes constructed between 2006 and 2007, are two of the factors that will prevent a rapid rebound in prices.

It recalls that house sales increased by 19.6% year-on-year in 2014, according to data published by INE, but that despite that, the number of homes sold amounted to less than half the sales recorded in 2007. The agency expects the number of house sales to increase to move than 400,000 homes this year.

But it also believes that there will be a two-speed recovery. The slowest recovery will be seen in coastal areas and on the outskirts of large cities where there is a larger supply of homes. By contrast, in the centre of large cities, such as Madrid and Barcelona, prices will increase.

Original story: Idealista

Translation: Carmel Drake