Spanish Property Market – 2016 Outlook according to IPE

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Spanish Property Market – 2016 Outlook according to IPE 
marbella-sol(…). According to the XXII edition of the Real Estate Pulsometer published by the Institute of Business Practice (IPE), the outlook for 2016 is promising. Next year, house prices will rise strongly (by 6.6%), sales will increase by 17.2%, construction of new homes will rise by 12.2%, mortgage lending for urban properties will increase by 16% and stock will decrease by 24.7%.
In addition, the report forecasts a gradual recovery in the rental market, a sharp increase in yields on housing and a full-blown recovery in the non-residential sector, which has broken records in 2015 and on course for a positive 2016, with fewer operations but higher prices.
The most tangible indicator of the real estate recovery will be “the increase in the sales of homes, offices, warehouses, retail premises and land (especially urban)”, says José Antonio Pérez, Director of the Real Estate Department at IPE and the author of the report. (…). We expect to see around 820,000 operations closed in total in Spain in 2016, which represents an increase of 8.1% with respect to 2015 and 23.7% more than in 2014.
Increases across all regions
More than half of the properties sold will be homes. Specifically, next year, 481,500 homes will be sold, i.e. 17.2% more than in 2015 and 50.7% more than in 2014, according to the study, prepared using data from the MAR Real Estate network of estate agents and the Network of Qualified Real Estate Advisors, cross-checked against official figures from INE, the Ministry of Development, the registries and the notaries.
Sales are expected to grow by the most in País Vasco (by 26.8%) in 2016, followed by the Balearic Islands (24.5%), Madrid (23.5%) and Cataluña (22%). Only Castilla-La Mancha is expected to experience a decrease next year: operations will decrease by 2.4% in that region, which has the highest volume of stock per capita in Spain.
In other words, the recovery will continue to take place at two speeds, but the differences (between the speeds) will be less marked, in the sense that, although we will see different speeds, improvements will be seen across almost all of Spain.
In the context of more transactions and increased mortgage lending, house prices will increase significantly. On average, by 6.6%. If we also take into account non-residential assets, property prices will increase by 8.17%, on average.
The market for new builds will also be affected. According to the Pulsometer, cranes will return to our cities, albeit gradually. Specifically, construction permits (which indicate future construction activity) will increase from 58,636 in 2014 to 82,682 in 2016. Up by 41% in two years (in 2015, they already increased by 9% YoY). Moreover, construction will begin on 39,000 residential properties in 2016, up by 12.2% compared with 2015 (34,700). (…).
The changes will also help to reduce the stock of unsold new properties. This surplus amounts to 433,583 homes at the end of 2015. In 2016, a quarter of that supply will be used up, taking it down to 326,295 units. That figure represents less than half the number in 2014 (675,945), according to the IPE’s study.
More mortgages
The real driver behind this consolidation in the residential market is financing. Mortgage lending for urban properties (in other words, not only homes, since the report does not break down non-residential financing) will amount to 426,647 (individual mortgages) in 2015, up by 23% compared with 2014. The figure for 2016 will increase again to 494,890, i.e. 16% more than this year. (…). The average mortgage in 2016 (€122,500) will be higher than since 2011 (€124,862). (…).
Source: Juanma Lamet (Expansion), link. Translation by AURA REE
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