Completed housing will increase by 23% in 2019, the highest figure in the last six years
 Monday, 23/12/2019

  • Growth of the main market indicators will continue, but more moderately
  • The volume of housing transactions will close 2019 with an increase of between 5 and 6%, reaching 623,000 transactions. The pace will moderate for 2020 with a growth rate of 4%
  • Housing starts will increase by around 8.5% next year with 125,000 registered projects
  • Housing prices will show a moderate growth of 4.8% in 2020
  • New construction stock will close the year at 445,225 homes, a 3.8% reduction and a trend that will continue into 2020

Barcelona, December 23th 2019.- The Spanish residential market will continue consolidating its growth, and stabilization is expected for 2020, according to the forecasts estimated by the main indicators of the sector. This is the conclusion of the VIII report on the “Residential Market in Spain” created by Servihabitat Trends, the market research and analysis platform sponsored by Servihabitat.

Iheb Nafaa, CEO of Servihabitat, notes that “the trend of moderation is confirmed as pointed out in last year's forecasts. We hope it will continue, given that the Spanish economy continues to grow showing signs of a slowdown. Similarly, the main indicators will show reasonable adjusted increases in full harmony with the country's situation”.

Housing starts will grow by 8.5% in 2020 and completed homes by 18.4%
2019 will close with an increase in stock of completed housing of 23.4%, equivalent to more than 79,000 projects, which represents the highest recorded figure in the last six years. For 2020, completed and delivered construction work will reach 18.4%, more than 94,000 completed projects, a significant figure as it is practically double that of 2014-2016, and has not been seen since 2013.

As for housing starts, it is estimated that this year will close with more than 115,362 homes, an annual increase of 14.9%. Project starts will continue, with signs of moderation in 2020, and an increase of 8.5% expected over 2019. This trend responds to the general context of the economy, attempting to adjust to demand and avoid large stocks.

The Community of Madrid (25,604), Andalusia (18,966), and Catalonia (18,656) are the regions with the most housing starts this year and next year, with La Rioja, Cantabria, Ceuta and Melilla in the other end of the spectrum. In the context of first home development, greater activity has been detected in the largest centers of population, especially in provincial capitals such as Madrid, Barcelona, Valencia, Seville and Malaga.

The holiday home market experienced stronger activity while staying within the more traditional areas, such as along the Mediterranean coast and the two archipelagos. However, there are specific locations in which the uncertainty over Brexit is slowing down some operations by the foreign buyer.

Residential transactions will grow 4% in 2020
In recent quarters, 130,000 residential transactions have been exceeded, something that has not occurred since 2008. In this regard, it is estimated that housing transactions will increase by 6.1% at the close of 2019, amounting to more than 623,000 operations. This upward trend will continue for 2020, but more moderately, to almost 650,000 transactions, an increase of 4%.

The steady pace of job creation contributing to higher disposable household income, the moderate approval of loans by financial institutions, or the ongoing interest in real estate investments as well as high rental incomes, are the main factors that help drive demand and growth in this indicator.

Andalusia, Catalonia and the Community of Valencia are the autonomous regions with a higher number of residential transactions for the coming year.

Focusing on the type of housing, new home transactions over the total transactions will represent 11.1% at the close of 2019, while 88.9% of operations will correspond to existing homes, according to the data from the Ministry of Public Works and Notaries. By price, 66.6% of property has a price lower than €150,000, while only 9.4% exceed €300,000. Finally, 34.3% of sales are for homes between 60 and 90 sqm in accordance with the opinion of Servihabitat’s Network of partner agents (APIs). Furthermore, in the case of first homes, three-bedroom choices are predominant for apartments, while for single-family terraced homes, the choice is divided between three and four bedrooms, and in single-family homes four bedrooms are the preferred option in 60% of cases.

The report developed by Servihabitat Trends shows a slight increase of the With regard to the average time for property sales, going from 6.1 months recorded in 2018 to 6.5 months currently for first homes, and it has also grown from 7.2 months in 2018 to 7.9 months in 2019 for holiday homes.

As has been occurring in earlier periods, more than half of first home buyers (60%) in Spain are between the age of 36 and 45 years, while this percentage is reduced to 54% for holiday homes. So, the average age for purchasing homes in Spain is rising, from 38 years to 38.7 currently.

The decrease in new construction stock continues by 3.8%, and another absorption of 3.5% is expected for 2020
The amount of housing stock continues with its downward trend: a 3.8% decrease (445,225 homes) is expected by the end of the year 2019, and a decrease of 3.5% is expected for 2020, which would place the stock at 429,525 units.

Just as in previous years, 50% of the stock is concentrated in three autonomous communities: the Community of Valencia, Catalonia and Andalusia.

In Spain, there are currently an average of 94.9 homes in stock per 10,000 inhabitants. The figure is significantly higher in La Rioja, Castilla-La Mancha and the Community of Valencia, although the Region of Murcia, Castilla y León, Asturias and the autonomous cities of Ceuta and Melilla also surpass this national average.

In 2020, housing prices will increase moderately by 4.8%
In 2019, housing price increases will moderate to around 5.7%. This trend will continue in the coming year with a smaller increase of 4.8%.

Accordingly, the average value of transactions is higher in the Community of Madrid, the Balearic Islands and the Basque Country, followed by Catalonia in fourth place, both in 2019 and 2020. Compared to last year, those with the highest percentage increases of transactions were the Community of Valencia, Andalusia and the Balearic Islands.

The average time taken for a household in Spain to purchase a home continues to rise, reaching 7.5 years in terms of gross income in 2019, an increase on the 7.4 years in 2018.

The residential market in Spain is growing at a higher rate than that of the EU
As noted in the report prepared by Servihabitat Trends, Spain continues to move closer to the European Union average (31%) in terms of the percentage of population living in rental homes, or more specifically, 23.7% in 2018, a figure was 21.1% in 2014 and 22.9% in 2017. Along with Sweden and Denmark, Spain is the third most advanced country.

According to data presented in the study, the amount of rental homes currently available in Spain is 16.1% less than a year ago, due to the strong demand of the population and the consequent reduction of the offer. In September 2019, the number of homes was 87,770.

The amount of rental homes available in Spain will continue in the future with a minimum of 70,000 homes per year (similar to the average observed between 2013 and 2018). The current figure represents 1.9 homes per 1,000 people and 4.7 per 1,000 households. As for the stock of available rental homes, apart from the provinces of Madrid and Barcelona, the Andalusian provinces of Seville and Malaga stand out especially for their higher percent of volume.

The average price of renting in Spain remains high, and will continue to rise, but with more moderate increases than a year ago. For an 80-90 sqm home, the average rent in the country is €800, 12.7% more than in 2018. A figure that is exceeded in communities such as the Community of Madrid (€1,021), the Balearic Islands (€953) and the Basque Country (€911).

The gross average profitability for a rental home is 5.7%, where the Community of Madrid (5.8%) is above this national average.

As pointed out in the document, the evolution of the rental market in Spain shows an ascending trend. During this last year, part of the existing offer has been absorbed thanks to the demand and it helped market to work with liquidity.

Foreign buyers account for 16.4% of total home purchases in Spain
Through to the end of June, there were 2.3% more transactions in Spain made by foreign buyers, totaling 93,952 transactions and representing 16.4% of all home transactions in the country.

Seven regions accounted for 91% of all homes purchased by non-resident foreigners: The Community of Valencia, Andalusia, Catalonia, the Canary Islands, the Balearic Islands, the Community of Madrid and Murcia. At provincial level, ten provinces exceed the national average percentage of purchases made by foreign buyers (12.4%): Alicante, Almería, the Balearic Islands, Castellón, Girona, Las Palmas, Malaga, Murcia, Tarragona and Tenerife.

On balance, it was found that the Spanish residential market still has room for growth in 2019, but it is confirmed that more moderate rises will continue next year in harmony with the macroeconomic framework.

To view all the data and trends for this year and the next one, please, visit the following links:

 

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