He housing market in Spain lives one of his best moments due to economy growing, job creation and confidence recovery lost after the crisis. This is one of the main conclusions of both the Residential Snapshot of the first quarter and the Residential Report recently published by the real estate consultant Knight Frank.
The improvement of the indicators made the year 2018 closed with a increased 9% in the home purchase, and of 4% in the prices of these. This is the starting point you started with 2019, in whose first quarter unemployment again registered a further decline, and the index of confidence and intention to buy a home also increased in the year-on-year comparison. With this start of the year, It is expected that throughout the year there will be a stabilization in both demand and house prices..
Household debt at the end of 2018 was from 64,7% del PIB and the effort to acquire a home was in a 32%, still far from the debt limit recommended by experts. The number of mortgages granted in January 2019, had increased by 18% with respect to the same period of 2018, arriving at 36.800, although the amount of the same had experienced a decrease of 1% compared to the previous year.
On the other hand, Due to the various urban operations that have been finally approved, the number of homes started is expected to increase considerably in the coming years. In your snapshot (snapshot) of the sector, Knight Frank foresees that in 2019 the number of houses started to grow by 30% compared to the previous year, (until 115.000 units approximately), while it estimates that the finished ones do it in a 35% (until 80.000). This increase in the supply of new work will increase the number of transactions linked to new promotions compared to second-hand, which currently represents 91% of all operations.
As indicated by the consultant Knight Frank in your Residential Snapshot, it is expected that 2019 continue the increase, although more moderately, which is good news for Carlos Zamora, director of the residential area of the real estate consultant, “because it will cause the cycle to lengthen”. Zamora also adds that “the year has started with a home profitability of 4%, a 1,2% above what other alternative investments offer such as government bonds. And this will continue to provide investor confidence, that will continue betting on this sector”.
This good progress of the real estate sector, especially in big capitals like Madrid and Barcelona, reaffirms the different factors that differentiate the situation we live in 2008 of the current, like more restrictive mortgages, the evolution of supply and demand, less effort in acquiring the home, greater professionalization of the sector and prices below the peak.
This same study by the real estate consultant also lists the most important challenges for the sector in 2019. For example, incorporating technology applied to real estate (PropTech), that improves the marketing process by identifying the real needs of current demand and offering a global service. Other elements such as Big Data, he Crowdfunding and the Crowdlending or the Blockchain provide, meanwhile, great and effective productive advantages. Technology has also renewed the concept of housing, creating authentic smart homes that make life easier for its members., while the figure of the architect is still another fundamental factor that today is renewing marketing, being increasingly influential at the time of purchase and giving more prestige to a property.
The Madrid residential market
The capital is one of the first places to experience the consolidation of the recovery of the real estate sector in Spain. So, In the last year, new construction visas and completion certificates grew by 17% and almost a 25% respectively. There are currently close to 3.500 households of new work free in Madrid, of which the highest concentration is outside the M-40 and in the PAUs area, while something more than 21% of the total is located inside the M-30, mainly due to lack of land finalist.
Since 2017 and until the first quarter of the year 2019, the highest absorption has been recorded in the PAUs, due to the more affordable price they have and the greater number of buyers who can access this type of housing. This is favoring the development of these areas, unlike the interior of the M-30, where due to lower supply and higher prices, absorption is lower.
The most common typology in Madrid is the home of Three bedrooms, which supposes a 43% of the total, except for the interior of the M-30, where the two-bedroom apartment is located practically on the same level. In this same area there are also a significant number of studios and one-bedroom homes, while in the PAUs this typology is almost non-existent. For his part, four-bedroom homes take on greater importance outside the M-30 ring.
The most common buyers in the PAUs are families looking for large spaces with services, while downtown areas are more in demand for one-person profiles or young couples who prioritize proximity to the center or live in more representative buildings.
The revival of the real estate sector is being experienced especially in the most sought-after areas of Madrid. The limited supply of available housing in the capital has contributed to the rise in prices and it is estimated that they will continue to grow during this period. 2019, although more moderately. The rise in prices in the city center coupled with the shortage of land within the M-30, is boosting demand in the most peripheral districts like in the northwest of Madrid. This will be a key year for the development of large real estate projects that have already been approved and launched, like the operation Mahou Calderón and Madrid New North.