Our Percentage of the Month: -1.2%
New in December 2019 news of real estate in Spain: saw -4.5%, fall in prices in a single month in Barcelona!
The Real Estate News of December 2019. Every month, we present the most recent real estate news. You can benefit from the main indicators and the latest information to buy better in Spain.
The biggest monthly drop in prices in Barcelona … since May 2014!
We announced it to you as it happened. The consequence of the violent events of October in Barcelona is an unprecedented monthly fall in real estate prices of 1.2% in November in the Catalan capital (source: Idealista), after a drop of 0.2% in October. Unheard of for more than 5 years and the monthly decline of May 2014 (-1.3%)! The most affected neighborhood is where most of the events took place. This is Eixample with a decrease of -1.8%. Meanwhile, prices were stable in Madrid (-0.2%), Valencia and Palma (-0.1%), Alicante (0.0%), Seville (+ 0.2%) and down in Malaga (-1.1% but after an increase of + 0.5% in October). Our forecast: a further decline in Barcelona in the current circumstances.
Price increase of 3% in 2020 according to Tinsa
The average price of homes in Spain will increase by 3% next year and sales by 3% to 5%, according to the forecasts of the research department of Tinsa (the largest property development company in Spain). In general, Tinsa expects all indicators (supply, demand and price) to be stable in 2020, after the “general cooling” recorded in 2019.
10% of real estate purchases for investment
According to the Fotocasa real estate portal, in 2019, 78% of real estate acquisitions are destined to become principal residences from the moment of purchase. And 10% of properties are acquired for financial profitability. For two-thirds of investors, it will be through the long-term lease (5 years) interesting given its profitability (5.2% on average) higher than other investments, especially financial. For a sixth, it will be tourist rental (less than a month) or temporary (one month to a year). The last sixth prefers not to rent because of the risk of unpaid rent. Investors are on average 45 years old, have a comfortable income (between 5000 and 8000 €), and already own their main residence.
Better to buy than to rent!
The Sociedad de Tasación (one of Spain’s leading real estate development companies) carried out a study on the efforts required of resident households for renting or buying property in Spain. The weight of the rental cost in the household budget should not exceed 33%. However, if we take the example of a flat of 90 m2, it reaches a record rate of 44% in Barcelona and 40% in Madrid and Palma. While the effort of households to acquire the same property would be only 31% in Barcelona and 27% in Madrid. Conclusion: in Barcelona as in Madrid, it is better buy than rent!
Increase of 40% of “co-living” in 2020
Coliving is a new community way of life that combines colocation and coworking (common workspace). This new real estate business model is attracting a lot of interest from investors. It is expected to grow by 40% in Spain over the next year. This enthusiasm is explained by the profitability offered. An apartment rented according to this business model offers a profitability of 15% to the owners, whereas for a traditional rental apartment, the average profitability in Spain is 5%.
What does a house cost each month
Being a homeowner (on credit) not only requires sufficient solvency to face the mortgage, but also involves a series of maintenance costs that often are not taken into account. Thus for a monthly mortgage of 1000 € (loan of 200.000 € over 20 years at 2%), you need to count in addition each month: electricity and gas costs (100 to 150 €), water (50 €), condominium fees (€ 100), home insurance (€ 30), various repairs and reforms (€ 50), IBI (€ 50). In total, it’s about 400 € more …
58% increase in illegal occupations in five years
Illegal housing occupations increased by 58% in five years. The number of illegal occupations listed by the authorities in 2018 is 12,214. The most affected province is Barcelona which, with a total of 17,465 cases in the last six years, has a rate of 66 complaints per 10,000 dwellings. Then come Tarragona (53), Girona (49) and Seville (42). Although the number of illegally occupied dwellings in Spain is unknown, the Cerdá Institute estimates that they are close to 100,000. After an occupation, there are criminal and civil remedies to recover the property. A new law, approved in July 2018, facilitates this procedure.
20.000 € / m2, the most expensive promotion of Spain is in Madrid
The most expensive promotion in Spain is in Madrid. This is the “Mabel Villa de Paris” building, a former nineteenth century building with a protected facade located in General Castaño Street. The purchase of an apartment in this promotion costs between 15,000 and 20,000 euros per m2. The work will be completed in 2020. There are 12 large apartments of 3, 4 or 5 bedrooms, with spa and fitness room. The building will have the highest energy rating. There is only one home left for sale!
The advantages of industrialized housing
Manufacturers are betting on industrialized housing (prefabrication of modules and panels), which saves them time and money and offers a quality product. In a promotion of 80 or 90 dwellings, normal construction times are 18 to 21 months. With the industrialization process, they are reduced by more than 6 months, to 12 to 14 months. This process also has the advantage of having a lower environmental impact and to offer better working conditions.
Negative balance of € 80 billion of real estate assets of Spanish banks
Spanish banks have a negative investment balance of 80 billion euros in real estate between 2014 and 2018. This figure makes Spanish banks the leader in the real estate divestment throughout the continent. In the two years 2017 and 2018 alone, the banks divested 104 billion euros (Santander 36 billion euros, CaixaBank 19 billion euros, Sabadell 19 billion euros, BBVA 17 billion euros). Nevertheless, Spanish banks (SAREB included) still have 130 billion toxic real estate assets on their books.
Confidential and Express News in December 2019
- Real estate professionals are very upset about the government measures taken this year. The new rental law and the new mortgage law were intended to promote rental access and protect homebuyers. Results to the contrary: fewer rental offers, therefore higher prices, and lower real estate purchases due to new regulatory constraints.
- The “Colegio de Registradores” (profession in charge of registering the properties) saw a sharp slowdown of the real estate sector during the third quarter, with the 1.73% fall of the IRAI, the Registrar of Actividad Inmobiliaria (l ‘Registration index of real estate activities, the first decline since 2014.
- One in three trustees admit to having problems with tourist housing in residential buildings. The main complaints concern noise (76%) and non-compliance with the rules of cohabitation (66%). Followed by dirt, lack of security and vandalism.
- 90% of luxury apartments in Spain are overvalued between 10% and 30%, according to a study on the influence of homeowners on the price of luxury housing, carried out by the real estate company Barnes. The study shows that a property for sale at the real market price sells up to 18 times faster than the one whose price is overvalued. The first is sold in two months on average, while the sale of the second can wait … three years.
- The next three years are essential for the future of the big promoters in Spain. Metrovacesa, Aedas, Neinor and Quabit want to deliver 8,400 homes in 2020 and 11,800 in 2021. This would mean tripling the number of units delivered this year.
- In Seville, more and more emblematic professional buildings are being transformed into four- and five-star hotels of international chains (Marriot, Accor, Radisson). The transformation of offices (BBVA, Banco de Andalucía, Abengoa) or shopping centers (El Corte Inglés) into luxury housing is the new trend in the Andalusian capital.
- Wework, the American giant of coworking in great economic difficulty, abandons his project of Barcelona of 10.000 m2 in the urban renewal area of Barcelona’s formerly industrial area of Poblenou, in the district of Sant Martí.
- Spaniards are the Europeans who spend the most on renovation (pro rata of income): 15% of disposable income per household. In comparison, the restoration budget of the British is only 7%, that of the French 5% and that of Germans 3%.
- Portal de L’Angel, the famous street of Barcelona overlooking the Place de Catalonia, is ranked 14th of the most expensive shopping streets in the world, with a rental value of 3420 € / m2.
- Inditex will transform its store of Paseo de Gracia with the Catalan Corts in Barcelona, currently with 2500 m2, in the largest Zara in the world with 6500 m2.
- The number of residential projects currently under construction in Barcelona (198) has decreased by 10% compared to last year. Among the key factors for this decrease is the change in regulations imposed by Ada Colau, the mayor of Barcelona, which requires to reserve 30% of new promotions to low income housing.
- The real estate fund Real I. S., a subsidiary of the Bank of Bavaria Bayern LB, plans to invest up to € 1 billion in real estate in Spain within 4 years. The advantages of Spain according to the German fund: bank sector recovered, improvement of the economic situation, declining unemployment and legal certainty.
The News in December 2019
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