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Spanish property prices up and down according to location, latest index suggests
While most experts agree that the Spanish residential property market is well into recovery, there is unlikely to be much of an increase in prices. Indeed the latest house price index from property portal Fotocasa suggests that prices are on an up and down trajectory but with no big surprise. Asking prices fell 0.8% in 2015, down from an average of €1,632 per square meter in 2014 to €1,619 per square meter as of December 2015, according to the Fotocasa index. However, Marc Stucklin, of Spanish Property Insight pointed out that last year’s house price decline was the smallest since the crisis began and this provides more evidence that the Spanish house price crash has come to an end. For example, a year ago prices were still falling by 5.7%, and by 10.% in 2012 and property prices while not rising overall, are increasing in certain locations. Beatriz Toribio, head of research as Fotocasa, an increase in mortgage lending is helping to boost the market at a time when prices are still relatively cheap compared to before the meltdown after the global economic crisis of 2007. The data shows prices rose the most last year in the Balearics with growth of 3.3%, followed by La Rioja up 2.4%, Madrid up 1.4% and Andalusia and Galicia both up 0.7%. ‘We are witnessing a two speed market. Whilst there are parts of Catalonia, Madrid, and the Balearics, where prices have bottomed out, in places like Castile-La Mancha and Extremadura, there is still plenty of room to fall,’ explained Toribio. There are also variations within cities. ‘In Madrid and Barcelona prices are consolidating their recovery, but on the outskirts of those cities the evolution is more unequal,’ added Toribio. Since the peak of the market in 2007 prices have fallen 45.2% overall. The biggest decline has been in La Rioja where prices are down 55.1% from peak, Castile-La Mancha down 52.6%, Navarre down 52.5%, Aragon down 52%, Murcia down 49.9%, and Valencia down 48.3%. Prices have fallen the least in Galicia with a decline of 31.5%, down 33.1% in the Balearics, down 36.3% in Castile and Leon and down 37.3% in the Basque Country, according to the Fotocasa data. ‘Prices look to be more or less stable, but still slightly negative at the end of 2015, with little sign of upward pressure on the horizon,’ said Stucklin, who added that big regional variations exist. Continue reading
Call for UK wide housing review to access impact of buy let tax change
A long term, strategic comprehensive review of housing policy and housing need in the UK is needed as recent changes are set to distort the property market, it is claimed. In particular, the Government ought to recognise the contribution of private landlords as tax changes could seriously affect the buy to let market to the detriment of those who cannot or choose not to buy a home. In a response to the Government’s new stamp duty regime for second homes, Paragon Mortgages says that there should be a comprehensive review looking at the housing dynamics over the last 30 years. ‘Whilst we agree that support for home buyers is an important strand of housing policy, if the interests of home buyers are prioritised above the interests of those in the Social Rented Sector (SRS) and the Private Rented Sector (PRS), then serious distortions may arise as a result to the detriment of those who cannot afford to buy or choose not to buy,’ the document says. ‘Policy changes that may result in reduced supply of properties to the PRS, risk driving up rents and constraining choice to the disbenefit of those who rely on the PRS for a home without delivering corresponding benefits in owner occupation,’ it explains. The document also says that there are more significant structural issues at play in the heart of the housing market so the review is needed to look at housing provision across all tenures. Paragon has been operating in the buy to let market since the inception of this specialist finance for landlords in 1995 and says that it has extensive experience of the market, a deep understanding of how landlords operate and how important buy to let finance is to the supply of property to the PRS. ‘What the Government appears to be overlooking with their focus on driving up home ownership, is that regardless of aspiration, home ownership is not a suitable solution for everyone. Some demographics need and want to live in the PRS because it best suits a variety of their individual requirements including lifestyle choice and financial capability,’ said John Heron, director of mortgages at Paragon. ‘The proposed 3% increase in Stamp Duty will not bring the market to a grinding halt and is unlikely to deter most landlords from their current, immediate investment plans but it will undoubtedly impact on some landlords’ future plans for growing their portfolios,’ he explained. ‘Our fundamental issue with these changes and also the proposed changes to tax relief of mortgage finance is that private landlords provide a valuable contribution to the wider housing market mix and this is not being recognised,’ he added. ‘With a declining social housing sector and with more people choosing not to buy their own home, it is important that the service the PRS provides is not overlooked,’ he concluded. Continue reading
Record foreign investment in UK commercial property, but it is slowing
Last year saw record foreign investment in UK commercial property but a sharp slowdown in the second half of the year will make 2016 more of a challenge, a new analysis suggests. Some £67.5 billion was invested in UK commercial real estate in 2015, a 5% decrease on the record of £70.7 billion invested in 2014, making it the second strongest year on record and 46% above the 10 year average, according to the latest research from CoStar Group, a commercial property information provider. Momentum slowed sharply in the second half of the year, with investment down 19% from the previous year. The firm says that this reflects the fact that investment activity has been especially strong over the previous 18 months and good opportunities are harder to find, but also that increasing global economic and political uncertainty is impacting investment decisions. Nevertheless, 2015 was a strong year for the UK's big six regional cities. Office investment increased 16% to £3.2 billion, which is the highest level since the recession and more than double the eight year average. Foreign investors seeking standing assets and development opportunities underpinned much of this investment. Foreign investment into the UK totalled a record £27.8 billion in 2015 a 6% increase on 2014’s £26.2 billion. International capital accounted for 45% of the total volume of transactions, with investment into the UK being spearheaded by the US with a total of £11 billion. But the report shows that investment into UK commercial real estate from the Middle East dropped dramatically by 62% to £1.6 billion, the lowest level since 2012, and it says that this is largely attributed to the collapse in oil prices and the political uncertainty in the region. In contrast, Far Eastern investment increased by 62% in 2015 to £6.4 billion as investors from Singapore and Hong Kong in particular flocked to the relative safe haven of the UK. ‘Despite it being a record year for international capital investing in UK commercial property, we have started to see signs that the market is slowing down. Total investment in the second half of 2015 was down 19% compared to the second half of 2014,’ said Richard Yorke, director of market analytics at CoStar. ‘With 2016 beginning with severe stock market volatility, heightened worries about China’s economy, falling oil and other commodity prices, and uncertainty about the UK’s place in the European Union, total investment may continue to ebb,’ he added. The report also show that demand for alternative assets such as hotels and students accommodation rose strongly in 2015. A sum of £5.5 billion was spent on hotels in 2015, a 47% increase on 2014 making it the strongest year ever. In addition, £4.3 billion was invested in student accommodation, more than double the level invested in 2014 and the strongest year on record. In terms of sector, offices dominated with £29.5 billion spent… Continue reading
