Mortgage market supporting a Spanish housing recovery
A recovering mortgage market is essential for the overall recovery of the housing market in Spain.
Data issued by the INE who take their information from Land registry and data taken from the Notaries which is extracted at signing, show that June and July continues the slow but generally sustained signs of recovery in some areas, and at least stabilization in others.
July’s house sales, as according to land registry totaled 32,714 an increase of 13.9% on June of the previous year. Of all house sales 85.7% related to urban property with the rest being Rustica. Rustica sales were only up just over 4% on the same month of the previous year. With lenders still loathe to lend money for the purchase of country properties and loan to values restricted normally to 50% the Country Properties will find the recovery much slower and tougher to sustain.
Whilst July’s figures were on the increase when looking at trends, so sales between June and July across a 5 year period, July figures were up 7% over June this was lower than the 9% that July’s sales were up over Junes in 2014.
New Builds and Resales
Hit hard in the last few months have been the sale of new builds. New builds made up a very small percentage of total sales and was down on 2014 by over 9%. In total 26,300 dwellings sold were resales and only 6,400 were new builds.
Availability of quality new builds is restricted with many new builds on sale being those built toward back end of boom when developers though they could build anywhere at any size and sell because of demand. Whilst not yet reflected in the figures there are now an increasing amount of new builds where quality parcels of land have been bought, and larger better value for money apartments are being built. Poor quality historic plots and low quality built developments are still hard to sell but new projects coming through may help to address this balance.
Most Spanish Banks having shied away from development lending since 2007 are now actively looking at supporting new house builds. The Banks are keen to support construction loans for prime plots where a Spanish Builder is being used to build the development and the promoter has a good track record inside or outside of Spain.
The month of July saw the highest absolute sales of homes only January’s figures exceeded this.
Andalucía and Madrid and Cataluña sold the most properties and all were up on the same month of the previous year. The Balearics had the highest level of growth at 37.4% and Murcia and Asturias showed declines. Murcia was the only region well known for International clients owning property in Spain to show any drop.
Notary data versus land registry
The Notaries whose report is one month behind reflecting June’s figures rather than Julys showed a similar picture. Whilst the reporting is a month behind the actual data is extracted at signing so is more live time than land registry.
Sales of houses signed at Notary were up 19.4% on the previous year. Whilst overall sales were up the average price per square meter dropped marginally in June down by 0.3% to € 1.260 per meter square. This brings the total average drop in house prices to minus 33.6% since the height of the market in 2007. The drop in prices within the month is a reflection of the aggressive pricing private owners are offering and their propensity to negotiate on price. This is the complete opposite to new builds where developers believing a recovery is underway have put up prices ahead of the curve and affected their business accordingly.
Mortgage loans signed in June were up 18.8% to 16,002. The average loan amount rose 7.5% on the month and is up annually 4.5%. In July the average loan amount reached €121.445. Given prices of property fell within in the month the rise on average loan size perhaps indicates a willingness by the Spanish Banks to look at increased loan to values per client borrowing and a more confident approach from borrowers.