Brick recovery takes shape. The improvement of data in the sector leads experts to predict that the rise in housing prices has, for the moment, come to stay. The National Institute of Statistics released Wednesday that free housing rose by an average of 4.7% last year, and everything points to the next months the floors will continue to rise, albeit at a moderate pace. There are several aspects that support this theory.
The rise in prices has accelerated in Madrid and Catalonia and in the sector takes these two territories as an indicator for the future. The two autonomous regions, or rather the cities of Madrid and Barcelona, anticipate how housing will behave in the rest of the country onwards, as José García Montalvo, professor of Economics at the Pompeu Fabra University and real estate expert, explains.
In the fourth quarter of last year, the flats rose well above the average in the two communities: 9% in Madrid compared to the same period in 2015 and 7.4% in Catalonia.
In the opinion of Óscar Martínez, president of the Professional Association of Real Estate Experts, at the moment we are witnessing a normalization of the sector, with moderate rises in prices that are still under way because we come from very low levels, sometimes even below costs of production.
In this sense, José Luis Ruiz Bartolomé, real estate consultant, recalls that there were six exercises with sharp price declines (from 2008 to 2013, inclusive), one year without growth (2014), and only one increase exercise (2015, when Was 3.6%). The market has fallen more than 40% above the 2007 and 2008 peak levels, and is now slowly recovering the tone, he points out.
Another aspect that points to where the real estate market is headed is the change of trend in the new construction. The construction stoppage in the crisis caused that the increase of prices in the new buildings was bigger and produced faster than in the used ones. This is no longer the case, as new housing production is increasing. The experts consulted point out that for this reason the prices of the used properties can begin to rise with something more of force. In fact, new housing increased by 4.3% a year in the fourth quarter (three points less than in the third), while the second hand increased by 4.5% per year (one point more than in the previous quarter ). Currently used housing accounts for about 80% of total sales.
Ruíz Bartolomé calls attention to other factors that are also driving prices. On the one hand, investors see that prices are low and rental returns high, and that leads them to position themselves. On the other hand, improving GDP and employment coupled with improved mortgage financing encourages households to buy for use. The real estate consultant adds to all this that in the locations where the demand is concentrated, the supply is already scarce and costs to replenish, since the processes of urban management and the processes of licensing are slow.