The price of housing is soaring in Barcelona and Madrid.

I don't want to say anything but don’t tell me in the future that I have not warned you.

 

Property prices are to rise from now on if we continue without a major world calamity. The prices of houses in Barcelona have increased at an annual rate of 9.2%, while the value of apartments in the capital have increased by 7.5% and I remember that these were the same symptoms when everything started around December 2001.

 

A major internet portal say so.

Servihabitat one of the main Spanish portals for selling and buying property in Spain expected an average increase in house prices of up to 6.3% in 2016.

The housing market is emerging ever more strongly on the side of prices in the big cities and some parts of the Coast, with Barcelona and Madrid in front. This is corroborated by Tinsa in its IMIE Local Markets Index for the first quarter of 2016. Between January and March, the value of homes (new and used) in Barcelona and the capital shot up 9.2% and 7,5%, respectively, in the last 12 months.

These high percentages are well above the national average revaluation, which stood at 1.4%, bringing the market along and in its second quarter continues  to rise. Catalonia (8.2%) and Madrid (7%) "Continue to be the locomotives thanks to the dynamism of their capital," says Tinsa.

After Catalonia and Madrid, the biggest increases were concentrated in Baleares (3.8%); Castilla-La Mancha (3.5%) and the Canary Islands (2.4%). In this sense, for the first time since the onset of the crisis, there are regions that recorded growth in the first quarter which had experienced declines in the past.

 

How long does it take to sale a property in Spain?

10.5 months is the average sales term.

According to the data on housing supply and the rate of sales and purchases recorded in each area, the provinces where more time it takes to find a buyer are Cantabria (19 months), Avila (17.1 months) and Álava (16 ,8 months). At the opposite end, in addition to the autonomous cities of Ceuta, Melilla, they noted that the provinces of Las Palmas and Madrid, had a term for sale that does not exceed seven months.

 

In turn, the percentage of income to pay the first year mortgage stood at 22%, while it is required six years of average Spanish salary to buy an average home in Spain.

 

The question is: Is economic recovery here to stay?

It seems that 2015 was the year of the revival for the housing market and 2016 marks the beginning of the normalization process after seven years of deep crisis in the sector.

It is a recovery that is here to stay, this is a new, more rational and sustainable cycle, and the overall decline in housing prices has closed permanently, (I think) even the Spanish political uncertainty has not caused the recovery process to cool down. However, Tinsa warns that there are markets at different speeds and micro-markets.

The housing price recovery will be moderate and not exceed 5%, according to this leader in advice and assessment on real estate.

The levers that support this housing market recovery is the dynamism of the economy, the progressive revitalization of credit and the gradual labour market recovery.

However, although in principle the market is moving and uncertainty is not affecting the market it could "slow" purchasing decisions or investment and generate caution if it is to continue indefinitely.

In any case, the market seems to be currently very positive to undertake the purchase of a home at present stage now, especially considering that financial cost will rise, due to mortgages interest, at least in the medium term, so people are taking advantages of the current financial conditions. The scenario is clearly showing a growth in the home market, both on prices and financial costs or interest rates.

 

More purchases, mortgages and building licenses applications.

The director of the Research Department of Tinsa, Jorge Ripoll, has forecasted that interest rates will remain low in a scenario of low or negative rates. According to Tinsa, purchases will grow between 10% and 15%, to between 440,000 and 460,000 house units sold, while building licenses will rebound between 30% and 40%, to between 65,000 to 70,000 this year.

 

In addition, mortgages will grow between 15% and 20%, with a total number of between 281,750 and 294,000, in a scenario of "moderate growth" in prices. Ripoll has indicated that there is a "bag of potential demand" among the more than four million unemployed that sooner or later will find jobs and will generate an additional demand for properties”. So let’s keep our fingers cross and hope that he has done his homework.

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