Tag: variation

College of Registrars Creates New CPI Indicator for RE Sector: the IRAI

4 December 2017 – El Confidencial

The recovery of the real estate sector is now a reality that nobody doubts. In fact, activity in the sector in Spain has been growing in a sustained way since 2014, far from the minimum levels of 2013, but also a long way from the peak heights. The volume of – new build and second-hand – transactions is rising; more mortgages are being granted; property prices are recovering; and new build permits are increasing. Moreover, the number of companies linked to the sector filing for creditor bankruptcy is also decreasing. Each one of these parameters has its own indicators proceeding from different sources (e.g. Spain’s National Institute of Statistics (INE), real estate websites, appraisal companies, Ministry of Development…), that show the evolution of those specific parameters.

Nevertheless, from now on, there is going to be a new indicator that groups them all together and, through a complex weighting system, shows the overall evolution of activity in the real estate sector. This new indicator is the Real Estate Activity Registry Index (IRAI), compiled by the College of Registrars. According to its creators, it is set to be called the CPI of the real estate market, given that its preparation adopts a very similar methodology to that used by INE to measure inflation.

The indicator takes the year 2003 as the base year (100); it serves as the reference for analysing the evolution of real estate activity. In this way, for example, during the third quarter of this year, the IRAI amounted to 98.26% points, 30% below the maximum levels of 2007, the year the real estate bubble burst. During the first 3 months of that year, the index reached its maximum, 139.90 points. Nevertheless, since the historical minimum of 68, to which it fell in 2013, the sector has risen by 45% to date. Like in the case of CPI, the IRAI can be softened or purified to avoid seasonality, in which case, it amounts to 94.34 points.

This new index is a synthesis of different indicators. It includes real estate transactions, mortgage financing and, in addition to the above, another set of commercial activity indicators, such as the number of company constitutions, economic variables from filed annual accounts and bankrupt companies, in all cases relating to the construction and real estate sectors. For its launch, the College of Registrars has constituted a Committee of Experts, advisors from the college in each aspect listed above, who have been responsible for preparing the index and determining the weighting of each one of the indicators in the index. The IRAI will be prepared on a quarterly basis (…).

Evolution of the IRAI so far this year

The variation in the IRAI since January has been an increase of 10.12%, representing the cumulative impact of the ownership element (9.55%) and the commercial element (0.57%). In other words, the part corresponding to house sales and financing has pushed up the index by the most, compared to the boost from commercial activity. In December last year, the IRAI amounted to 89 points, compared to 98.26 now.

In this way, the groups with the greatest positive cumulative impact so far this year have been sales (cumulative impact of 6.98%) due to the significant rise in the number of sales (cumulative impact of 6.11%), especially of new and second-hand homes with growth rates of 31.87% and 27.06% and cumulative impacts of 1.19% and 4.14%, respectively.

Sales prices also grew by 3.74% (impact of 0.87%) with the price of second-hand homes having a greater impact (impact of 0.9% with a growth rate of 5.91%). Meanwhile, mortgages (cumulative impact of 2.56%) due to the significant increase in the number of mortgages (cumulative impact of 2.05%), especially for new and second-hand homes with growth rates of 21.65% and 15.42% and cumulative impacts of 0.92% and 0.94%, respectively.

From the commercial perspective, the greatest boost to activity has come from the decrease in the number of creditor bankruptcies involving both construction companies, which have decreased by 83%, and real estate companies, which have fallen by 57% (…).

Original story: El Confidencial

Translation: Carmel Drake

Ministry of Development: Urban Land Prices Rose By 11.7% In Q2

25 September 2017 – Eje Prime

The average price of urban land is continuing to soar quarter after quarter. The average price rose by 11.7% in cities with more than 50,000 inhabitants during the second quarter of 2017, according to statistics from the Ministry of Development. This increase means that the price of such land now stands at €326.3, the highest level since Q3 2015 (€331.1).

At the national level, average urban land prices have risen by 1.8%, to €166.4. With respect to the first quarter, the QoQ variation was slightly negative, with a decrease of 0.7%.

The highest average prices were recorded in the provinces of Granada (€510/m2); Barcelona (€491.5/m2) and the Balearic Islands (€321.5/m2). The lowest prices were observed in the provinces of Albacete, Ourense and Tarragona (€60/m2, €117.6/m2 and €130.6/m2, respectively).

Meanwhile, the number of transactions undertaken during the second quarter of 2017 amounted to 5,998, up by 36.3% compared to Q1 2017, when they amounted to 4,401, and up by 35.2% compared to Q2 2016, when 4,435 plots were sold.

In total, the total surface area sold during the second quarter of 2017 amounted to 7.2 million m2, for a total value of €1,073.8 million. With respect to the second quarter of 2016, the YoY variations represent 28.6% more in terms of surface area sold and 43.0% less in terms of their value.

Original story: Eje Prime

Translation: Carmel Drake

Registrars: House Prices Rose By 7.7% YoY In Q1

18 May 2017 – El Mundo

Homes are becoming increasingly expensive. House prices rose by 7.7% during the first quarter of 2017 in YoY terms, according to the real estate statistics published by the College of Property Registrars. With respect to the last quarter of 2016 – i.e. looking at the QoQ variation – the increase amounted to 4.1%. With these new increases, the cumulative adjustment since the peaks of 2007 continue to fall and now amount to 22.8%.

On the other hand, 113,738 house sales were recorded between January and March, representing the highest quarterly figure since the first three months of 2011. The increase amounted to 21.8%, with respect to the previous quarter. In interannual terms, the positive trend continued: prices rose by 14.4% with respect to the same quarter in 2016.

On this occasion, contrary to the trend seen in recent years, new house prices performed in line with the general increase, accounting for 18% of the total number of sales, with a significant QoQ rise of 27.5% (20,490 sales), whilst the sale of second-hand homes rose by 20.6% compared to the previous quarter, to reach 93,248 operations.

Purchases by overseas buyers reach peak levels

The weight of house purchases by overseas buyers remained relatively stable during the first quarter of the year to account for 13.1% of all registered sales. That corresponds to sales of around 15,000 properties per quarter. In cumulative YoY terms, foreigners accounted for 13.3% of all purchases, a historical maximum, and corresponding to more than 55,000 house purchases per year by overseas buyers.

By nationality, the British continued to lead the ranking, accounting for 14.5% of all purchases made by foreigners, although their continued fall over the last few quarters (during the previous quarter, they accounted for 16.4% of all purchases made by foreigners) has brought the figure to a new historical low over total purchases by foreigners. The French rose to second place with 9.6%, followed by the Germans (7.7%), Belgians (6.9%), Swedes (6.3%) and Italians (6.1%). These first six nationalities accounted for more than half of all house purchases by foreigners.

Average mortgage amounted to €116,182

Mortgage debt to buy a home increased by 3.6% compared to the previous quarter, to reach €116,182, whilst the number of fixed rate mortgages continued to rise sharply, in line with previous quarters, to account for 38.7% of all new contracts, compared to 31% in the previous quarter, a new maximum in the historical series.

This situation leaves variable rate mortgages at their lowest figure to date, especially, Euribor, which was the reference rate for just 60.3% of all mortgages. The average initial interest rates on new loans decreased slightly to reach 2.3% from 2.4% in the previous quarter.

The terms of new mortgage loans remained relatively stable, recording a slight increase of 0.7% compared to the previous quarter, and an average term of 23 years and four months.

Access to housing saw a slight deterioration: the average monthly mortgage repayment during the first quarter amounted to €536, representing a QoQ increase of 2.2%, whilst the percentage of that repayment over wage costs rose to 28.3% from 27.6%.

Original story: El Mundo 

Translation: Carmel Drake