THE REAL ESTATE MARKET IN SPAIN

Ten years after the real estate crisis suffered by Spain, we could say that the market is slowly growing again. The level of sales transactions is getting close to the values from 2008. For example, in the second quarter of 2018, an amount of 134.196 sales transactions was completed in Spain, which means 12.4% more than the previous year in the same quarter. 

We can say that the market is in a recovery process. It can be foreseen that this trend will continue. If everything continues as just like the first half of the year, 2019 could be reached with 550,000 sales transactions in the previous year, according to BBVA Research.

What´s driving the growth of the real estate market?

The main force that drives the growth of the real estate market is the sale of second-hand houses. This tendency continues the awakening that data from last year indicated,  in which 494.263 housing transactions were completed. Regarding the new housing market, it has exceeded 85.000 operations, what means only a fraction of the total amount. This was to be expected, since construction sector has been building at a slower rhythm and a greater exchange of second-hand housing has been manifested in recent years.

In this issue, it has a relevant weight that some houses have finished in the toxic assets of the bank entities. Although they are new homes for practical purposes, they are also considered a second hand because they are not sold directly by the developer.

Throughout Spain, there are four autonomous communities that exceed 20.000 sales transactions: Andalusia, Catalonia, Valencia and Madrid. In the second quarter of 2018, Andalusia has had a volume of sales of 26.487 transactions, followed by Valencia with 20.903. Catalonia registered 20.594 transactions and 20.218 were registered in Madrid.

The price of housing is another issue that influences the current situation of the real estate market. In the second quarter of 2018, the price of housing has increased by almost 3%. The revaluation of housing is expected to reach an average of 4.8% in 2018.

Is the crisis of the real estate market over?

It seems that the real estate market has considered the crisis as finished. A powerful growth started maybe leading to future problems. Is it true that we are swelling a new housing bubble?

The Bankia Research report says no. Data seems to deny that we are at the beginning of a new bubble because 10% of the maximum level of building visas in the country has not been reached yet. To give an example: in 2007 a historical maximum of 885.181 new construction documents was given, while last year there were only 75,146.

The developers, construction companies, and real estate companies remain optimistic. After eight years of real estate break, they say that five good years await us, as long as the banks "continue to be controlled without making big follies," according to Beatriz Toribio from Fotocasa.

In any case, is too early to make asseverations, given the still changing economic outlook of the real estate market and the high level of unemployment.

For the moment, it is better to act prudently and take into consideration the prices of the built and already sold properties of the big cities.

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