Tag: uneven

Bank Of Spain: Average Housing Yield Amounts To 8.8%

30 April 2017 – Expansión

Housing is still one of the most profitable investments. The net return from buying a home to put it on the market to rent, now amounts to 8.8% on average. That is according to data from the Bank of Spain, which takes into account not only income from the rental of properties, but also the annual appreciation in their values. In other words, if the rental of a home generates an income of 4.4% and the price rises by 5% in twelve months, then its total return would be 9.4%. And that represents an attractive yield, well above the rates being offered on debt and deposits. Moreover, in some places, the real estate market is offering even higher returns.

To this end, Expansión has identified the districts in Spain’s five largest cities where investors can earn more than 10% from buying a home. And the conclusions are clear: 9 out of the 10 districts in Barcelona and 12 of the 21 districts in Madrid already exceed that percentage. In Valencia, 10 of its 19 districts generate returns of more than 10%; in Sevilla, only 1 out of 11; and in Zaragoza, 4 out of 12.

The most profitable districts are concentrated in the Catalan capital, above all due to the very high appreciation in property values there. Ciutat Vella leads the ranking with 27.7%, followed by Eixample (22%) and Horta-Guinardó (20.5%). That same percentage is also being generated in the Madrilenian district of Hortaleza (20.5%), which is not one of the most selective neighbourhoods, but, prices are rising quickly there nevertheless. It is followed by the Centro district of the Spanish capital (19.8%). Following those five, the ranking continues with Rascanya (Valencia) and Tetuán (Madrid), both with a gross annual return of 18.9%.

In the most exclusive neighbourhood of Madrid (the district of Salamanca) the figure is 13.9%. In Sarrià-Sant Gervasi (Barcelona), the average return is 9.8%. Other prime locations such as Chamartín (14.6%) and Gràcia (17.9%) are also very attractive. (…).

“The increase in returns in the city centres is happening due to a cocktail of senior boomers (the generation born in the 1960s) returning to the city centre and the huge boom in tourist rental properties”, said José Antonio Pérez, Director at the Real Estate Practice of the ‘Instituto de Práctica Empresarial’. That means that “now is a good time to buy a small flat or a small building to turn it into apartments for tourists”, said Pérez. (…).

But, investors should not limit themselves only to the large cities to find attractive investments. “Savers should also buy tourist homes in areas along the coast where there is already a lot of demand, or in peripheral areas of large cities that are well connected or in university areas”, advised Pérez.

The recovery in the residential sector is spreading out across the whole country. Slowly and unevenly, but it is happening. (…).

According to Jorge Ripoll, Director of Research at Tinsa, “The best prospects for investment in housing are located in established areas with active markets that are clearly recovering, such as those in Barcelona, Madrid, Málaga, Valencia, San Sebastián and Bilbao, for example”. They are areas “where asset prices are rising and where there is solvent demand for primary residences from those who cannot afford to buy a home due to their inability to have been able to save in the past”, he said.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

Bank Of Spain: The Housing Market Is Not Overheating

4 April 2017 – El Mundo

The Bank of Spain (BdE) does not perceive “any signs of overheating” in the housing market, nor does it expect the real estate sector to overheat anytime soon, given that the recovery in the market is happening at the same time as the process to deleverage the economy.

During the presentation of the supervisory body’s macroeconomic forecasts for the Spanish economy (2017-2020), the Director General of Economics and Statistics at the Bank of Spain, Pablo Hernández de Cos, denied that the housing market is showing any signs of overheating.

Hernández de Cos highlighted that the housing market has been enjoying a recovery for several quarters, which is being seen in the number of transactions, the number of new builds started and the trend in prices, although the Bank of Spain does not expect “the market to overheat”.

Despite the fact that the growth rates “may be significant”, the Director of the Bank of Spain said that after a “very significant” adjustment process in the sector in terms of transactions and the correction of prices, the recovery in the market is taking place in parallel to the continuation of the process to deleverage the Spanish economy. “We are not seeing any signs of overheating”, he added.

“Uneven” reactivation

In its forecasts, the supervisory body notes that high-frequency information relating to both the number of new builds started and the number of transactions involving residential properties, indicates a “continuation of the path of gradual improvement in residential investment, whose prolongation during the forecast horizon will be based on the favourable evolution of employment, the expected continuation of propitious financing conditions and the expectation that assets are going to appreciate in value”.

Nevertheless, it forecasts that the recovery will progress in an “uneven” way by region, with the main cities and autonomous regions most focused on tourism experiencing the most intense growth. In any case, it warns that the latter areas may experience a certain moderation in demand as a result of the process for the United Kingdom’s exit from the European Union (EU).

Original story: El Mundo 

Translation: Carmel Drake

Fitch: House Price Recovery Will Be Slow & Uneven

15 September 2015 – El Economista

According to the ratings agency Fitch Ratings, the latest data shows that the decrease in house prices in Spain “has now bottomed out”, however, it expects the rise to be “slow and uneven”. Moody’s thinks that the banks will be the main beneficiaries of the expected rise in house prices.

The agency notes that house prices increased by 4% during the second quarter of the year with respect to the same period in 2014 – the largest increase since 2007, according to figures released last week by the National Institute of Statistics (INE).

In this regard, it highlights that house prices have increased in inter-annual terms for the last five consecutive quarters, and as such are in line with its latest forecasts, which predicted that prices would stabilise between 2014 and 2015, after seven years of decreases.

Fitch notes that the recent decrease in mortgage costs suggests that a surge in household loans will pave the way for a gradual recovery in house prices.

However, it warns about the impact that the number of foreclosed homes is having on the market, since they are affected by the weakness in the Spanish residential market, including a stock of between 500,000 and 600,000 empty new homes, the high level of unemployment and the limitations on demand due to low salaries.

For this reason, it believes that the recovery in house prices at the national level will be “limited” this year, with “significant” variations between regions and with a section of the market still experiencing “difficulties”.

Original story: El Economista

Translation: Carmel Drake