Ten graphs to understand how the real estate sector has changed since the boom
The wounds that led to the bursting of the bubble continue to hurt and yet many believe that a new boom is brewing. A theory that is far from the reality that the official figures show. Only 22% of the mortgages are being signed, which means that the m2 of land costs half, the debt of families continues to fall, the price of housing rises at a more contained rate, 16 times less new building permits are granted and the financial effort to acquire a flat is lower. In addition, renting has become a real alternative for home seekers.
We review 10 of the most important indicators of the sector to show that the normalization of brick is a fact and that they are laying the groundwork for its recovery, but that at the moment there are no signs that lead us to think of new real estate delays
1. Prices rise by half (and have been down years)
At present, the price per m2 of free housing stands at 1,525.8 euros. According to the Ministry of Development, this is the highest level since 2012, although still far from the more than 2,100 euros we saw in early 2008.
Housing has already accumulated four consecutive quarters of rises and the market assumes that the upward trend will continue for several years, but insists that it will not reach the increases seen in 2007, when housing has risen more than 7% interannual in a single quarter. In addition, we can not forget that prices fell uninterrupted between the end of 2008 and the beginning of 2015, so there is still room for improvement. According to banks and rating agencies, prices will slow down from 2018.
2. Almost 40% fewer homes are sold
Currently, more than 1,400 houses are being sold per day in Spain. According to the INE, in May almost 45,000 operations were formalized, the highest figure since February 2011. In the accumulated of the year, the number of sales and sales is close to 200,000 and experts believe that 2017 could be sold with some 450,000-500,000 houses sold, while in 2018 we could see more than half a million transactions. Although the number may seem very high, the truth is that in 2007 were closed to close 775,300 operations.
3. High rental demand pushes prices up
Another of the most significant changes that the real estate market has experienced since the boom is the increasing weight that residential rental is acquiring. As Fernando Encinar, head of idealist studies, says, “the rent has come to stay”.
This housing alternative has been gaining traction thanks to factors such as geographical mobility and the scarce options of young people to buy a home. The demand for rental housing far exceeds the offer in large cities such as Madrid and Barcelona, where prices of the square meter are in the zone of historical highs. In the capital, for example, the price is at 14.6 euros / m2 according to idealist data, compared to 12.7 euros in 2007, while in the city of Barcelona the price is around 17.8 euros / m2 , compared to EUR 14.5 pre-crisis. However, there is already a small brake on the price increase in both cities.
4. Buying a home requires much less effort
Another of the best thermometers in the real estate sector is the financial effort to acquire a home, that is, the number of years of full salary that must be spent for the purchase of the property. In this case, data from the Banco de España put the financial effort at 6.9 years, far from the 9 years recorded in 2007. Since the first quarter of 2012, this indicator has remained below 7 years, although in recent years times there has been a slight rise as a result of housing prices are rising faster than wages.
5. Only 22% of the boom mortgages are signed
The loan signing to buy housing continues to rise: the last available figure of the INE, corresponding to last May, suggests that the formalization of mortgages is in highs since the beginning of 2012, although the figure is still testimonial if we compare it with those of the peak of the bubble. In September 2005, almost 130,000 mortgages were created, the same as between January and May of this year. If we compare the May figure with that of September, we find that only 22% of the boom mortgages are signed.
Another of the most important changes related to the mortgage market is the pull of the fixed rate: despite the fact that in 2008, 3 out of 100 loans were fixed at around 40%. Thus, Spain is approaching the levels of the rest of Europe and is preparing for the future rise in interest rates, which will increase mortgage rates.
6. The 12-month Euribor rises from 5% to historic lows
The 12-month Euribor, the benchmark for most mortgages in Spain, has been one of the most radical changes since the peak of the bubble. Currently, this index is at record lows (closed July at -0.154%) and accumulates almost a year and a half in negative territory (the first month in which it closed below zero in monthly rate was February 2016), it which has made it possible to cheapen the mortgage rates at variable rates. These levels are far from the highs it marked in the summer of 2008, when it reached above 5.3%, according to data from the Bank of Spain.
Experts believe that next year we could see a trend change in the indicator, although all the pointers point to the positive return to the terrain will be very gradual, in line with the expected interest rates in the euro zone. At the moment, at least, the average mortgage rate is lower than ever.
7. Household debt linked to housing, at 2005 levels
Another of the best indicators to measure how the real estate sector has changed is to look at debt linked to the housing of households. According to data from the Bank of Spain, the debt stood at 537.211 million euros in May. The figure is frightening, especially considering that it represents practically half of the current GDP; however, it is far from the levels we saw a few years ago.
Only in the first five of 2017, families have removed 7.1 billion euros of mortgage debt, which translates into about 39 million a day. From the high of 2010 (when the number touched the 680,000 million), the adjustment is about 143,000 million. Current debt is the lowest since 2005 and Spanish families are already among those that allocate less income to pay their debts on a global scale.
8. The stock of housing, in minimums of the last 10 years
The number of new unsold homes in Spain reached 491,693 units in 2016, down 4.3% interannual and its second lowest figure since 2007. For the first time in 10 years the stock falls below half a million new homes empty New unsold housing reached its all-time high in 2009, when the 649,750 units accumulated, mainly concentrated in the municipalities of the Levante. The digestion of the stock goes to different rhythm according to the region: the Valencian Community, Cataluña and Andalucia monopolize near 50% of these homes.
9. The urban m2 of land costs less than half
If we talk about the real estate sector it is essential to make a special mention to the land, which is the raw material of the activity. In this case, it is enough to review how the price of m2 has fallen in the big cities to realize that we are still a long way from the levels of the bubble. If in 2007 the area of urban land amply exceeded 600 euros, currently around 300 euros. And we can not forget that much of the problems of the boom was the exorbitant price of the land, which eventually moved to that of the houses. In fact, the promoters explain that half the cost of a new home corresponds to the price of the land, while another 25% is equivalent to taxes and the remaining 25% to the cost of production.
10. 16 times fewer certifications of new building
Permits to build homes continue to go up. Only in the first five months of the year, more than 35,552 new work visas have been granted, a figure that practically surpasses those registered in all of 2013, the most complicated year for the economy and the residential sector. However, if we put the improvement in perspective, we find that the licenses granted to raise houses are not even close to those granted during the peak of the bubble. Only in September 2006, almost 127,000 permits were processed, more than in all of 2015 and 2016 together.
Source: Idealista
