Do real estate prices change again? There are already experts who have seen falls in the market of the used housing during the second half of 2019. In particular, since Tecnocasa they have already received a 2.1% decline -year- in what would be the first decline in this period since 2014. The XXX Report on the housing market it reflects that Madrid and Barcelona accused the most important decreases in the price of used housing with falls of 3.85% and 3.26%, respectively.
Some setbacks, according to Tecnocasa, will move to large populations such as Seville, Hospitalet de Llobregat, Zaragoza, Malaga or Valencia, which still show positive growth rates. “They will end up completing the route that Madrid and Barcelona are marking and their prices will be reduced in the future,” says the specialized portal.
Regarding the price per square meter, Barcelona leads the ranking, with 3,143 euros, followed by Madrid (2,594 euros). On a national scale, the nominal price -2,297 euros- fell 34% since the end of 2006 and the beginning of 2007, when it registered maximum prices (3,500 euros).
“We are in a moment of falling prices and readjustment of the housing market, although there are no signs of crisis”
Can we talk about changing trends? The director of analysis and reports of Tecnocasa, Lázaro Cubero, believes that we are “at a time of lower prices and readjustment of the housing market, although there are no signs of crisis.” In his opinion, the recent falls are part of an adjustment. “The real estate market needs to slow the rise and stabilize the price of housing,” he said.
Cubero points out that “we are still at a time of still attractive prices (at 2011 levels) and with low interest rates.” However, the expert adds that it is important to filter well and select those homes that are at the real price of the current real estate market ', since, often, the offer price is not in line with the reality of the area. “For example, in the city of Madrid, the properties offered by individuals are overvalued by 17% above the market exit price recommended by a sector professional,” he says.
The Professor of Economics of the Pompeu Fabra University and coordinator of the Report, José García-Montalvo, see statements made by Servimedia– “a change of cycle” and warned that “not all bad data can be attributed to the new Mortgage Law, but the underlying reality is that the market was already slowing down before the entry into force of that law.”
Housing as an investment for rent
Another fact that supports some cooling of the sector is reflected in the investment purchase. The number of investors, those who buy a home to put it in the rental market, has remained high in 2019, with 26.5% of the sales made, one in four operations. On the other hand, this data is decreasing in the last two years, since in 2017 it reached 30%.
And, the market of rental It is still active, although it also begins to show the first signs of moderation. The price of rental housing rose nationally in 2019 by 4.6% when compared to 2018, although the cities of Madrid (3.79%) and Barcelona (2.13%) already show the lowest growth . When analyzing the gross profitability of the rental, Tecnocasa appreciates that this is located in the second half of 2019 at 6% nationally, and at 6.84% and 5.85%, in the cities of Madrid and Barcelona, respectively .
Regarding the rental policies of the Government of Pedro Sánchez, the Professor of Economics at the Pompeu Fabra University dismisses the measures being implemented as inefficient and urged to “look for imaginative solutions” to respond to the “housing emergency” . “If the legal security of investors is impaired, things get very complicated and the offer falls,” he adds.
Mortgages seek balance
The average mortgage was 118,471 euros in the second half of 2019, 0.7% less than in the same period of the previous year. In that second semester, the population that presented the highest mortgage was Barcelona, with 155,284 euros, while in Zaragoza the lowest was registered, with 76,904 euros.
From Tecnocasa they emphasize that the highest mortgage amount was reached in the first half of 2007, with an average mortgage of 185,642 euros, and the minimum, in the first half of 2014 (80,900 euros). Therefore, the decrease from the maximum record was -56%.
The CEO of Tecnocasa, Paolo Boarini, point out that the monthly mortgage payment was in the second half of 2019 at 462 euros per month, “in line with the previous semesters.” “This quota contrasts with that reached at the highest moment, second half of 2007, with a quota of 976 euros per month,” he adds.
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