House Prices Will Rise by 5%+ in 2019 & Sales Will Grow by 13%

8 January 2019 – Expansión

The normalisation of the market in Madrid and Barcelona will make way for high growth in provincial capitals such as Valencia, Málaga, Palma and Sevilla. Rents will rise by more than 10% in the large capitals and sales could exceed 600,000 units in total.

Housing is going to enter a new phase of the cycle in 2019. After a year of expansion in 2018, with growth brushing the records seen before the crisis, this is going to be the year of consolidation, but also of awakening in the medium-sized capitals.

A panel of experts consulted by Expansión foresees an average price rise of more than 5%, and an increase in the sales volume of between 10% and 13%, which means that house sales may exceed the threshold of 600,000 units. That would make 2019 the seventh consecutive year of improvement in the residential sector after prices decreased by more than 30% during the years of the crisis.

Madrid and Barcelona, which inaugurated the recovery in 2016 and which have been leading the housing charge until now, are going to begin a process of normalisation. The experts agree that moderation will be felt in those two markets in particular. In the case of Barcelona, the political uncertainty, control measures from the Town Hall and price levels reached could lead to corrections in some districts where prices have already peaked.

This year, it will be the new capitals that will lead the growth of the market. The last quarter of 2018 already closed with three revelations: Valencia, Málaga and Tarragona led the increase in sales prices, with rises of more than 15%, according to data from Tinsa. In 2019, the experts are placing their focus on those and other cities, such as Sevilla Alicante, Palma, Bilbao, Murcia and Zaragoza. In the large capitals, price increases will exceed 10%.

The rise in sales prices versus the stagnation of wages will continue to cause demand to increase in the rental market, which will rise by around 7%, and by more than two-digits in the large cities, where price tensions are even greater. The volatility of the financial markets will continue to make rental a very attractive investment option. Nevertheless, the experts warn that the uncertainty regarding the measures approved by the Government in terms of the rental segment could put future investments at risk.

Whether the sector tends towards a plateau or rather moderate growth will depend on factors such as the evolution of the economy, policy changes by the ECB and the measures that the Government decides to introduce.

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake

Arcano: House Prices Rose By 6.9% In Q1 2016

26 May 2016 – El Economista

House prices accelerated their growth in Spain during the first quarter of 2016, increasing by 6.9% with respect to the same period last year, according to Spanish Real Estate Macroeconomic analysis performed by the independent financial advisory firm Arcano.

The study shows that the recovery is being seen in every autonomous region, regardless of the political colour; both in the new and second-hand housing segments; and in terms of both housing and land. Following a decrease in house prices of 38% in nominal terms and 50% in real terms, Arcano believes that the increase, which began in 2014 “should be maintained due to the positive underlying forecasts for demand, supply and accessibility”.

Specifically, the analysis highlights that the sale of homes in Spain continued to grow at double-digit rates during the first quarter of the year, increasing by 10% YoY, favoured by “significant” demand from foreigners, who now account for 13% of all house purchases in Spain.

Moreover, Arcano explained that another pillar of this data for the recovery of the residential sector is based on the “favourable” macroeconomic environment in Spain, especially the “historical” 12% decrease in unemployment and the subsequent 3.3% improvement in employment and 1.1% increase in wages, following several years of stagnation.

“The economic improvement is allowing pent-up demand for housing to flourish”, says the report, which adds that the recovery of the real estate sector in Spain “is continuing, led by strong fundamentals and a favourable macroeconomic environment in Spain”.

It also helps that house purchases are recovering not only due to necessity on the part of buyers, but also due to investment, given their “attractive” prices in comparison with other assets, explains Partner and Chief Economist at Arcano, Ignacio de la Torre.

In addition, mortgage loans have become cheaper, reaching average levels of 2.38% during Q1 2016, generated by the fall in Euribor. In turn, the number of new mortgages signed in February 2016 rose by 16% YoY, following their increase of 20% in 2015 and 2% in 2014.

In terms of the supply of housing, Arcano says that “it is still very limited”, above all the supply of new vacant homes, which is “practically” non-existent in many areas with high populations and GDP, such as Madrid, Barcelona, Sevilla and Valencia.

Specifically, 46,000 new homes were constructed in 2015, compared with 641,000 in 2007. And although it is true that new housing permits are recovering, they are still a “long way below their historical levels”.

Original story: El Economista

Translation: Carmel Drake

Housing In Q3: Sales Rise By 6.4% & Prices Rise By 2.2%

16 November 2015 – Cinco Días

On Friday, the property registrars published their real estate statistics for the third quarter of the year. According to the figures, prepared using data obtained from operations recorded in the registries, the changing trend in house prices that began in 2014 continued to strengthen during Q3 2015. The Index of Repeat Sales House Prices (based on the Case & Shiller methodology applied in Spain) recorded a QoQ increase of 2.2%. In the last year, prices have increased by 6.6%. The rate of growth in recent quarters is continuing to abate the cumulative decline recorded since the peak levels of 2007, which now amounts to 28.4% on average.

Registered purchases

One of the explanations behind the price rises is the trend in house sales. During the third quarter, the registrars recorded 92,786 operations in total, which represents the highest volume in the last ten quarters, and an increase of 6.4% compared with the second quarter. It also represents an increase of 16.6% compared with the same period in 2014.

“The cumulative YoY data for the third quarter confirms this positive trend, showing that during the last twelve months, 348,388 operations have been recorded, i.e. 13,255 operations more than the cumulative annual volume as of the second quarter 2015”, said the College of Registrars in a statement.

As usual, the distinction between new and second-hand homes explains this positive trend: there were 18,017 operations involving new homes, which represents a new historical minimum, with a decrease of 2.5% compared with the previous quarter. Meanwhile, there were 74,769 transactions involving second-hand homes, which represents a QoQ increase of 8.8%.

Purchases by foreigners

Each quarter, the registrars’ statistics analyse what is happening in terms of demand for homes by foreigners, however it does not differentiate between residents and non-residents. In any case, the operations closed by foreign citizens continued increasing in terms of their relative weight, to account for 13.5% of all house purchases in Q3 2015, above the 12.8% recorded in Q2, which means that foreigners made 12,000 more purchases in Q3.

By nationality, the British, who account for more than 23% of all purchases made by foreigners, are the clear leaders of this ranking. They are followed by the French (who accounted for 8.7% of all operations), the Germans (6.4%), the Swiss (6.4%) and the Belgians (5.5%). The Russians have dropped to ninth place in the ranking, accounting for just 3.4% of all purchases and confirming once again the downwards trend seen in previous quarters.


(…). In terms of new mortgages, the average amount loaned per home equals €109,744, which represents a QoQ increase of 2.09%. In the last year, this figure has increased by 4.6%, to record six consecutive quarters of increases.

Mortgage terms (durations) are also moderating, given that during the third quarter, the average term decreased from 23 years to 22 years and nine months.

On the basis of this data, the College of Registrars estimates that new borrowers are paying an average mortgage instalment of €531.86 per month, i.e. 0.02% less than in the previous quarter, which indicates, according to the experts, that access to housing is stabilising at optimal levels in terms of risk. In fact, this instalment amount represents 28.12% of wages, below the 33% threshold that the Bank of Spain considers is the optimal risk level for households when it comes to borrowing.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

The Number Of People Out Of Work Fell By 13,528 In February

4 March 2015 – El Mundo

The construction and industrial sectors were the main drivers behind job creation, once again.

The labour market offered a breath of fresh air yesterday, after starting the year on a bad note. The number of people out of work decreased by 13,538 in February, the largest drop in this month for 14 years; and the number of people registered with Social Security increased by 96,909, the best figure in this month since 2007, according to the Ministry for Employment. The construction and industrial sectors were the main drivers behind job creation.

Traditionally, February tends to be a strange month for employment, with highs and lows, and since 2008, when we began to feel the first effects of the crisis, unemployment has always increased in this month, except for last year when the figures decreased by 1,949 people. This year, the number of unemployed people decreased by 13,538 in February. Despite this decrease, the number of people out of work in Spain is still worryingly high, with more than 4,512,123 people registered with the Public Employment Services (formerly Inem). This figure is even higher than the one Mariano Rajoy inherited when he arrived at La Moncloa for the first time.

By sector, unemployment increased in the agriculture sector only in February (by 467 people), whilst it decreased in construction (10,091), industry (6,535) and the service sector (233).

In light of this data, the Government is optimistic and confident that it will achieve its objective of creating three million new jobs by 2019. Currently, the total number of people in paid work amounts to 16,672,222.

The increase of almost 100,000 new taxpayers in February partly offset the significant decrease in the number of jobs in January, when the number of taxpayers decreased by 200,000, following the end of the Christmas season.

By sector, construction – one of the hardest hit by the crisis – was where the most jobs were created (26,968), together with industry (15,097). Meanwhile, the service sector registered 61,842 more taxpayers, thanks to boosts from education (16,203) and hospitality (14,012).

However, the resurgence in the construction sector concerns the opposition party and the trade unions. The PSOE’s (Shadow) Secretary of State for Employment, Luz Rodríguez, says “the return to property could mean that we exit the crisis through the same door that we entered it”.

In terms of the number of contracts, 1,226,950 contracts were registered in February, up 12.5% compared with the same month last year. Nevertheless, the majority (more than 90%) were still temporary. Only 120,181 contracts were permanent, equivalent to 9.8% of the total number. Nevertheless, the Ministry for Employment highlighted that these figures are 23% higher than in January last year.

In terms of the number of hours worked, 71,754 of the permanent contracts were for full-time positions (16,804 more than in the previous year, an increase of 30.58%) and 48,527 were part-time (5,673 more than in February 2014, an increase of 13.24%).

However, these figures are not good enough for the trade unions UGT and CCOO, which report that the jobs that are being created are “precarious” and “low quality” and that the wages are “clearly insufficient”. Moreover, they point out that the inequalities between men and women are increasing and that young people are being left behind. Thus, whilst the unemployment rate decreased for men in February (with 19,587 fewer unemployed men than in January), they increased for women (with 6,319 more unemployed women), taking the total number of unemployed men and women to 2,117,980 and 2,394,173, respectively.

Furthermore, the number of unemployed young people under the aged of 25 increased by 2,569, and the number of foreign unemployed people increased by 3,030. In the opinion of the USO trade union, these figures show that “the recovery in terms of unemployment is not on the right track”.

By autonomous region, Madrid was the community where unemployment increased the most in the month of February, by 2,411 people to be exact; followed by Andalucía, with 2,121 more unemployed people and Castilla-La Mancha with 139. Meanwhile, unemployment decreased in 14 autonomous communities.

In terms of the coverage rate, i.e. the percentage of unemployed people that receive benefits or allowances, it continued to decrease in an alarming way.

During the month of January – the latest month for which data is available – it amounted to 56.49%, i.e. five points lower than in the same month in 2013. This means that almost one in every two unemployed people registered with the former Inem, does not receive any kind of financial aid. Moreover, total spending on benefits amounted to €1,962 million in January, which represented a 17.7% decrease compared with the same month last year.

Original story: El Mundo (by Isabel Munera)

Translation: Carmel Drake