The bust is dead, the Spanish property market’s recovery has begun! That’s how some leading daily papers like El Pais are interpreting the latest figures from the National Institute of Statistics (INE) showing the market grew ever so slightly in January. Well, I wouldn’t try to claim a vigorous recovery is underway, but there’s no denying the market appears to have found a floor, which is an improvement on the 2 years plus of monthly declines we had before.
So what happened? Well, figures for January from the INE show that, excluding social housing, there were exactly 34,000 sales in January, up 1.4% over 12 months. A year-on-year increase of 1.4% is no big deal, but it’s a much needed respite when it is the first time in 3 years that the market has actually grown. And it’s difficult to dismiss it as a one off, because it is clear that the market has now found a floor around 30,000 transactions per month.
But, of course, we have to keep in mind that the market in January was 56% smaller than it was in January 2007, when it stood at 77,400 sales per month. So a year-on-year improvement is good news, but peak-to-trough the market is still just a shadow of its former self. Until that situation changes, there’s not much to cheer about.
If you dig into the figures you find that most of the improvement is now coming from resales, not new builds, as the chart shows. New build sales kept the market from total annihilation last year, but I’ve been warning for months that, sooner or later, they might fall off a cliff.
Story by Mark Stucklin
Tags: buying property in Spain, Property market trends, Recovery, Spanish property
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Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.6% in February compared to the previous month. Euribor now stands at 1.225%, the lowest level on record. Euribor is 43% down over 12 months, and 77% down from its all time high of 5.393% in July 2008.
As a consequence of the latest reduction in Euribor, repayments on a typical annually resetting mortgage (150,000 euros, 25 years, Euribor +0.75%) will fall by around 65 Euros a month, or 780 euros a year.
When Euribor rose a fraction in December I suggested that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January and February, that still probably holds true. Flipping around is often consistent with a period of change.
Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. By March borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower.
Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.
Story by Mark Stucklin
Tags: Euribor, Interest Rates
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The Spanish house price index figures for February 2010 have just been released. See the graph and the table below for an up to date overview of the real estate market trend in Spain.
Spanish property prices fell by 5.5% over 12 months to the end of February, according to the property price index published monthly by Tinsa, one of Spain’s leading appraisal companies. However, prices inland fell by only 3.8%, which is similar to last month’s 3.6%, and confirms a general trend towards smaller price declines. At this rate prices of inland property will be stable or rising again sometime in the next few months.
The graph and table data represent the year-on-year evolution of Spanish property values. For example, if the value for August 2009 would be -3.9, then this means that average property prices in August 2009 are 3.9% lower than they were a year earlier, in August 2008.
The graph and table on this page contain up to date information for the past 13 months. For more information, please look at earlier monthly reports, or the historical overview since January 2001.
The graph and table data are based on actual property valuations, as established by one of Spain’s larget independent property valuation companies, Tinsa S.A. They are not based on asking prices or (under)declared selling prices, nor on the statistics as provided by the Spanish Ministry of Housing, and are therefore considered to be the most acurate and reliable source for this kind of information.
Tags: House price index, Property market trends
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There was a small uptick in Spanish housing sales during the fourth quarter of last year, according to data released yesterday by the Ministry of Housing. Small, maybe, but enough for the Government to get excited about.
Beatriz Corredor, Minister for Housing
“The transactions in the fourth quarter represent a rise of 4.1% with respect to the same period last year, this being the first year-on-year rise since the fourth quarter of 2006,” goes the first sentence, in bold, of the Ministry’s press release.
In fact, if you just look at the ordinary housing market, the uptick was even better. Excluding social housing there were 116,664 house sales in Q4, a rise of 5.5%. Sales in the province of Malaga went up 3.6%. Regrettably, that’s where the good news ends.
Take the year as a whole, there 413,112 transactions last year, a fall of 19% compared to the previous year, and a whopping 46% down on 2007. Even the Q4 was down 33% compared to 2 years ago.
Some regions did better than others. Looking at a selection of regions popular with holiday home buyers, the inland province of Teruel suffered the most in 2009, down 36%, followed by Las Palmas in The Canaries, down 32%. At the other end of the scale, Spain’s two big cities did the best, down just 1.7% in Madrid and 3.9% in Barcelona.
Story by Mark Stucklin
Tags: Madrid, Malaga, Property market trends, Spanish property
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New mortgage lending in Spain is still very depressed, say the latest numbers from the National Institute of Statistics (INE). These figures are one of the few reliable housing market statistics we have, so it’s always worthwhile paying attention to what they have to say.
According to the latest figures, for December and therefore the whole of 2009, new mortgage lending fell again last year, by 22% in volume terms (to 653,173), and by 34% in value terms (to 76.8 billion Euros). These are the lowest levels in both volume and value terms since the INE started publishing this data series in 2003.
The number of new mortgages signed have been falling now for 3 years, and the value of new mortgages has been falling even faster. That means there is less money around to spend on property, which puts downward pressure on prices.
Mortgage lending has been falling in both volume and value for the last 3 years, though the rate of decline improved slightly in 2009. That means it is still falling heavily, just not by as much as last year.
Also, over the last 2 years, new mortgage lending has been falling more in value terms than in volume terms. That means that the average mortgage value is also falling, as borrowers take out smaller mortgages. The average value of new mortgages last year was 117,688 Euros, down 16% on 2008.
Why are people taking out smaller mortgages? Firstly, because the banks have tightened up their lending criteria, and now demand bigger deposits. But also because Spanish property prices are falling, so borrowers don’t need such big mortgages as before.
Peak to trough, new mortgage lending is down 51% by volume, and 59% by value, compared to 2006, when the market peaked. That is a massive decline in the amount of money around chasing property.
Story by Mark Stucklin
Tags: Mortgage Lending
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The International Monetary Fund said Thursday that Spain’s fiscal challenges are not as severe as those faced by Greece, reinforcing the message that Madrid has been delivering to the world’s financial markets.
In its first official comment on the matter, the IMF told investors that Spain should not be placed in the same boat as debt-laden Greece.
“Regarding Spain, we do see differences between their circumstances and those of other parts of the euro area,” IMF spokesman David Hawley said, dismissing the idea that Greece’s financial woes could spread beyond its borders.
Hawley said Spain has robust economic statistics and institutions with a solid track record and credibility, adding that the Iberian nation also had strong fiscal starting positions prior to the global recession.
That assessment echoed the message Spanish Economy Secretary Jose Manuel Campa has brought to Paris and London and plans to reiterate at closed-door meetings with investors in New York and Boston.
Campa said in an interview with Efe-DowJones that when investors see that the diagnosis of the situation has been correct and that the measures that the Spanish government has taken are adequate, “it will generate a lot of reassurance.”
Spain’s investment waters were calmer Thursday after the government sold a 5-billion-euro 15-year bond the day before in an auction that was oversubscribed, proving – experts said – the government’s ability to raise financing.
The country paid a risk premium of 85 basis points in the bond issue over the benchmark swap rate. By comparison, the risk premium demanded by holders of 10-year Greek bonds over Germany’s 10-year benchmark bonds rose Thursday to 328 basis points.
Hawley stressed Thursday that Greece’s budget deficit woes date back to before the global recession, while Spain had a surplus equal to 2 percent of GDP at the start of the financial downturn.
Story from Herald Tribune
Tags: financial crisis, Spanish economy
Posted in Financial & Mortgages | 1 Comment »
The Spanish house price index figures for January 2010 have just been released. See the graph and the table below for an up to date overview of the real estate market trend in Spain.
Spanish property prices fell by 5.5% over 12 months to the end of January, according to the property price index published monthly by Tinsa, one of Spain’s leading appraisal companies. However, prices inland fell by only 3.6%, which is a mayor improvement on the -6.8% last month, and confirms a general trend towards smaller price declines. At this rate prices of inland property will be stable or rising again sometime in the next few months.
The graph and table data represent the year-on-year evolution of Spanish property values. For example, if the value for August 2009 would be -3.9, then this means that average property prices in August 2009 are 3.9% lower than they were a year earlier, in August 2008.
The graph and table on this page contain up to date information for the past 13 months. For more information, please look at earlier monthly reports, or the historical overview since January 2001.
The graph and table data are based on actual property valuations, as established by one of Spain’s larget independent property valuation companies, Tinsa S.A. They are not based on asking prices or (under)declared selling prices, nor on the statistics as provided by the Spanish Ministry of Housing, and are therefore considered to be the most acurate and reliable source for this kind of information.
Tags: House price index, Property market trends
Posted in Property market | No Comments »
The European housing market hasn’t stopped attracting British buyers, with Spain as the top hot spot, according to The Independent.
Spain may be a surprise entry given that it is still struggling with high unemployment and a shrinking economy, but with average house prices falling by 8 per cent in the 12 months from September 2008, this may be the time to pick up property on the cheap.
And while Spain has been going through turbulent times, it is nevertheless still a firm favourite as a lifestyle holiday destination, despite all the bad press of late.
The British love affair with Spain shows few signs of abating. Spain came out as the top destination for international money transfers at the Post Office, as well as the cheapest place to live within the eurozone, according to its holiday costs barometer.
The full story: The Indepentent
Tags: bargain prices, buying property in Spain, Spanish economy
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The number of Brits buying euros for property purchases has increased in the last few days after sterling reached a rate of €1.15 for the first time since August 2008.
Foreign currency brokers have seen a 40% increase in clients buying euros, while new enquiries have shot up by 24%.
“A number of our clients in the market for euros are taking advantage of the improved exchange rate and buying their euros for overseas mortgage payments, property purchases etc now,” World First’s head of private clients, Elisabeth Dobson, told OPP.
“They are delighted to be getting a rate that is up to 12% better than the lows we have seen over the last 17 months. There are a number of clients who will have been holding off on property purchases and overseas investments due to sterling’s weakness against the euro. This rate move will certainly spur people on.”
A run of economic good news from the UK, including a fall in unemployment, rising inflation and an anticipation that the country is out of recession, has helped increase the pound’s strength. Meanwhile, economic problems in Spain and Greece have weakened consumer confidence in the euro.
Not all currency brokers have seen a substantial increase in business. “€1.15 is a bit of psychological barrier but most clients are still waiting for the magic €1.20 number,” Marc Morley-Freer, commercial director at Moneycorp, told OPP. “After the UK election we could see improvements that could push people to make lifestyle purchases – things are too uncertain before then.”
World First’s chief economist Jeremy Cook remains bullish following sterling’s 9% growth over the last year. “I don’t think this run in particular will last because it has happened so quickly, but the pound could be up to around €1.22 by the end of the year,” he told OPP.
Story from OPP
Tags: buying property in Spain, European economy, Recovery, Spanish economy
Posted in Financial & Mortgages | 1 Comment »
According to data released today by the National Statistics Institute (INE), the number of home mortgages issued during November 2009 was 52,043, representing a growth of 1.8 percent over the same month in 2008 and the first recorded rise since April 2007.
The volume of loan capital amounted to 6010.5 million, 10.1% less than the same month in 2008, which means that the average amount borrowed fell by 11.7% to 115,492 euros. Despite the rebound year in November, the cumulative comparison of January and November 2009 to the same period in 2008 showed an overall decrease of 23.2%.
Savings banks granted the most mortgages (52.2%), followed by banks (36.6%) and other financial institutions (10.9%). As for borrowed capital, savings banks granted 45.3% of the total, banks provided 43.0% and other financial institutions contributed 11.7%.
The average interest rate of savings banks was 4.25% and the average term was 23 years, while in banks, the average rate was 4.03% and the average term was 21 years. The variable interest mortgage remains the preferred option in 95.2% of mortgages, compared with only 4.8% opting for fixed rate. The Euribor was reported as the reference rate that was used in 88.7% of the mortgages.
The data also shows that in November, 40,156 mortgages had their conditions changed, 35.3 percent more than last year – 32,379 of these were changes in the conditions of a mortgage with the same institution (42.4% higher), mostly being attributed to mortgage payers taking advantage of lower interest rates and longer terms.
Tags: Euribor, Interest Rates
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