Spanish Siesta Under Threat

Is this the end of the Siesta?
Is this the end of the Siesta?

I’m sure you’re aware of the Spanish Siesta; the two hours in the afternoon, usually 2pm – 4pm, where shops close and everyone goes for a nap.

Spain is one of the few remaining countries that does this and some people suggest it affects business by effectively “closing” the country for two hours every day.

Acting Prime Minister, Mariano Rajoy, has plans to scrap it and reduce the length of the working day bringing it in line with the rest of Europe.

Mr Rajoy said he intended to “find a consensus to make sure the working day ends at 6pm.”

The siesta isn’t universally observed these days but the working day is still split with a two, or even three, hour lunch break, meaning the working day doesn’t finish for most people until 7pm.

The siesta was originally introduced to allow farmers and construction workers to avoid working during the hottest part of the day. It is also said that despite the longer working day, the siesta actually diminishes productivity for Spanish workers.

Flexible Hours

In 2013, a Spanish parliamentary commission said “We need more flexible working hours, to cut our lunch breaks, to streamline business meetings by setting time limits for them, and to practise and demand punctuality.”

The report also suggested that dropping the daily siesta would raise the quality and life, raise low birth rates and reduce marriage breakdowns.

The acting PM is also considering a return to GMT (Greenwich Mean Time) for the country which currently operates an hour ahead of London. The time zone shift was the decision of dictator General Franco in 1942 as a way of showing support for Hitler’s Nazi regime by bringing Spain in line with German time.

 

Property Rental Prices Increased in Q1

Expect to pay more for rentals in 2016
Expect to pay more for rentals in 2016

According to data released by property portal, Idealista, the cost of rental property increased by 4.3% across Spain during the first quarter ending March at 7.4 Euros per square metre, per month. Comparing on the annual rate the increase is 5.2%.

The rental market appears to be recovering more strongly than the sales market. Head of research at Idealista, Fernando Encinar, said “with the report data in hand it is clear that there is a huge demand for rental housing, and that supply is rising strongly.”

The recovery in rentals has to take into account the large amount of rental property available to the market. Excessive construction, leading up to the crisis, means there is a large stock of good quality housing resulting in a large and varied choice for tenants.

Encinar explained “Given that the construction during the years of the housing bubble left a large housing stock of good quality properties, the rise of rents can be a boost for many owners and a good choice for small and medium savers who want to seize the moment to invest in housing.

“With rates at zero and banks giving historically low yields many small investors are seeing good returns by buying homes and placing them on the rental market.”

Rentals by Community

All communities recorded an increase in rental costs during the first quarter, except for Euskadi where prices fell by 4%.

The largest increase was recorded in the Balearic Islands where rental prices have increased 11.2% to 10 Euros per square metre, since the start of the year. The closet “runners-up” were Madrid where prices increased 5.2%, Valencia which saw a 5% increase, and Catalonia where the cost of renting has increased by 4.7%.

Madrid remains as the most expensive location to rent a property. In the capital you should expect to pay 11.5 Euros per m². Catalonia follows as the second most expensive with prices of 11 Euros per square metre.

Andalucia saw prices increase 2.5% on the quarterly basis. The region shows an annual increase of 4%, remaining popular and closely matched to the average for Spain. The price of property for rent in Marbella increased 8% on the annual rate, showing a quarterly increase of 4.7%.

The Costa del Sol showed rental price increases in most areas with Estepona leading the way with a 27% annual increase. Prices in Malaga increased by 15.5%, followed by Fuengirola where rental prices increased 15.1% on the interannual rate.

Results by Province

Increases in rental costs were recorded in 38 of the country’s provinces with the largest increase registered in the Balearic Islands. Valencia saw prices increase by 6.7%, while prices in Madrid increased 5.2%. The largest decline in rental prices through Q1 was recorded in Tarragona where prices fell 8.6%.

When ranking the provinces in order of the most expensive, Barcelona leads with a price per square metre, per month, of 12.6 Euros. Madrid comes in second with 11.5 Euros per square metre p/month.

 

Coastal and Island Property Prices Increase

Property prices increased in March
Property prices increased in March

According to data released by Tinsa today, the average price of finished housing remained stable throughout March showing a slight increase of 0.8% over the same month last year.

The areas of the “Mediterranean Coast” and the “Balearic and Canary Islands” show the most positive month with both areas showing an increase in prices of 4.3% during March.

The cumulative adjustment since the pre-crisis peak remained at -41%.

Only two areas recorded negative adjustment on the annual rate. “Capitals and Big Cities” and smaller towns grouped under “Other Municipalities” both recorded prices slightly below those of March 2015, with annual declines of 0.6% and 1.3%, respectively. The areas grouped under “Metropolitan Areas” recorded a healthy increase of 2.8%, year-on-year.

Quarter 1, 2016

When looking at the evolution of prices over the first quarter of the year, the overall pricing index is 2.2% higher than the end of Q4, 2015. The highest quarterly shift was recorded in the “Balearic and Canary Islands” where prices increased 5.4% over the previous quarter. Following closely behind was “Other Municipalities” with a 3.4% increase, and the “Mediterranean Coast” where prices of property for sale increased 3.1%.

Despite recent price increases there is still a huge gap between today’s prices and those of 2007. The average adjustment across the country is currently -41%. In the “Mediterranean Coast”, despite the recent onset of a recovery, is still showing the greatest difference over prices of eight years ago. Currently prices on the south coast are 46.5% lower than before the crisis. Other areas where the price difference is over 40% include “Capitals and Large Cities” and “Metropolitan Areas”, where prices are currently 45.1% and 43.8% below pre-crisis levels, respectively.

The lowest cumulative adjustment since the crisis is recorded in the “Balearic and Canary Islands” where prices are currently 29.1% down, while “Other Municipalities” are still 36.1% below those of 2007.

The Tinsa IMIE index is calculated on the annual change in the value of a m² of a property.

 

Home Sales Soared 15.8% in February

Property sales increased in Feb 2016
Property sales increased 5.3% in Feb 2016

February 2016 proved to be a great month for property sales as the number of property transfers increased 5.3% over the same month in the previous year to a total of 154,386 properties.

Sales of housing increased a whopping 15.8% with 34,771 deed transfers registered, according to data released by the National Statistics Institute.

When looking at the type of housing sold, 84.9% was in relation to urban properties, with 15.1% of properties being rural. In the case of the urban properties, 56.7% were residential properties.

Rural properties showing an increase in the annual rate of 4.2%, while for urban properties the increase was 13.9%.

According to the data, 22.5% of the homes sold in February were new properties while resale (second-hand) properties accounted for 77.5% of purchases. This represents a fall of 0.2% on new property while resale properties seem to be responsible for the positive figures after registering a 21.4% increase in February.

By Community

Per 100,000 residents, the communities with the highest increases in property transfers during February were Extremadura and the Balearic Islands, with increases of 29.6% and 26.4%, respectively.

The only two communities to register a negative monthly variation were Andalucia which saw a fall of 10.6% and Galicia where property sales fell 1%, when compared to the same period in 2015. Despite this overall decline, Andalucia recorded the highest number of home sales in February with 6,476 homes sold. They were followed by Cataluña with 5,304 and Madrid with 5,275 home sales.

When looking at sales of residential property, the communities with the highest annual increase were the Basque Country with a massive 50.3% increase, closely followed by Asturias with a 40% increase and Cantabria where home sales increased 38.9%.

Type of Housing

The data suggests that 89.2% of the properties sold in February were free housing while 10.8% was protected. This represents an increase of 16% for free housing while protected housing increased 14.3%.

The data further suggests that when comparing February to January, 2016, sales of residential property increased by 7.3%, representing the first positive February for five years.

 

Resale Property Prices Increased in Q1

Spanish property market recovering
The Spanish property market is recovering

Property portal Fotocasa have released their Q1 report on second-hand (resale) property prices in Spain. The data shows a slight increase in prices of 0.5% over the first quarter of 2016 meaning a square metre will cost an average of 1,627 Euros. According to the report this is the first quarterly increase in prices since 2007.

The data released by Fotocasa suggests this is the third consecutive quarter of growth following Q3 and Q4 of 2015 which recorded increases of 1.1% and 0.7%, respectively.

Beatriz Toribio, from Fotocasa Studies, said: “The price of housing is stabilizing after eight years in the red. In 2015 we saw how the fall abruptly slowed and how some areas closed the year with price increases. After losing 45.5% of its value, we hope that in 2016 housing prices have bottomed out across much of the country and will begin to recover in the major economic and population centres,”

According to the report, the inter-annual rate showed an increase of 0.6%, the first increase in year-on-year prices recorded since 2007.

Q1 by Region

When comparing to December 2015, eight of the country’s autonomous communities recorded a positive change with the Canary Islands registering the highest increase of 6.3%. The Balearic Islands followed with a 2.2% increase. Valencia and Andalucia registered increases of 2.2% and 1.4% respectively, while Madrid showed an increase of 1%, with Catalonia closing the quarter with a 0.9% rise in property prices.

When we look at the average price per square metre, the Basque Country topped the table with 2,736 Euros per m². Second and third positions were taken by Madrid and Catalonia with €2,225 and €2,064 p/m².

The cheapest region was Castilla-La Mancha where the same space will cost you €1,050. The next two cheapest regions were Extremadura (€1,088 p/m²) and Murcia (€1,143 p/m²).

By Province

Thirty of the country’s provinces showed an increase in prices with the largest recorded rise being in Santa Cruz de Tenerife where prices increased 2.9%. Las Palmas was next with a 2.4% increase.

Of the 779 municipalities looked at by the study, 459 recorded prices increase, while 320 showed a decline in property prices.

NB: I must point out that this is data based on the prices of the properties Fotocasa, a property portal, have for sale on their site. Another property portal, Idealista, also release data based on their listings and that is why, in case any of you noticed, a previous article based on Idealista data, suggested prices had actually fallen in Q1. As with everything, it depends who you ask! If I report on both studies you can get a better idea of what the actual figures are.

‘Discriminatory’ Inheritance Tax to be Refunded

Up to 100,000 Brits could receive a refund
Up to 100,000 Brits could receive a refund

For many years now, British people who received a Spanish property as part of an inheritance found themselves lumbered with a huge, unexpected, tax bill.

Now it is revealed that many of these home owners have finally received their refunds after a lengthy battle. As much as 3.3 million Euros have already been refunded in taxes which the homeowners should never have been asked to pay.

Barcelona-based law firm Spanish Legal Reclaims are handling the case for many Brits and they say there is another seven million euros of claims in the pipeline.

Furthermore, the company’s chief executive, Luis Cuervo, expects to file claims for a further three million euros over the next few years as new claimants come forward.

Sources suggest that up to 100,000 Brits could have been affected by the charges with up to 300 million Euros unnecessarily paid.

The Agencia Tributaria (tax office) applied the charges when a property owner died and passed the property to a family member of friend. The charge was also applied to lifetime gifts. In some cases, the tax amounted to almost a third of the value of the property or gift and it had to be paid in full within six months of notification. However, Spanish residents were exempt from up to 99% of the tax and paid little or nothing.

Because of this disparity the European Court of Justice deemed the charges unfair. It is discriminatory for property owners living in another EU country to be charged higher taxes than locals, and the court said victims of the charges should be repaid, with interest.

The authorities are now repaying an average of €30,000 per claim. The refunds are not automatic and those who think they have a case need to file a claim themselves.

“Anyone who paid the inheritance tax during the past five years can claim back all the tax that they paid – but doing so is a complex and daunting task only for specialised lawyers, experts in EU tax claims, as there is no single form to fill in,” said Mr Cuervo.

Finally, a win for foreign property owners!

 

Average House Prices Increased in Q1

Property prices saw encouraging growth in Q1
Property prices saw encouraging growth in Q1

According to data released by Tinsa, average house prices in Spain increased by 1.4% during the first quarter of 2016, when compared to the same period in the previous year. This is the second consecutive quarter to finish with an increase, and comes despite the fall in prices for resale property.

As far as regions go, the two clear winner were Catalonia and Madrid who saw year-on-year increases of 8.2% and 7% respectively.

For the first time since the crisis of 2007, more autonomous regions recorded an increase in prices than a fall. Following the aforementioned “winners” other regions that saw significant price appreciation were the Balearic Islands with a 3.8% increase, Castilla La Mancha which saw a 3.5% increase and also the Canary Islands where property prices increased 2.4%.

Only two regions recorded a price fall – Aragon and Galicia – where prices fell by 3.5% and 3.1% respectively. When looking at how prices have or have not recovered since the crisis, property in Aragon is now 51.3% lower than in the peak of 2007. Castilla La Mancha has seen prices fall 51.2%. The smallest shift in prices is recorded in the Balearic Islands where prices are currently 28.9% lower than pre-crisis levels.

Provinces

By province, the largest quarterly increase was recorded in Barcelona where prices increased 8.9%, followed by Albacete (+7.6%), Madrid (+7%) and Lleida with a 6.5% increase. A further 12 provinces managed increases above the national average of 1.4%. The recovery seems to be continuing and also spreading out across the country.

The provinces that registered the largest quarterly fall were Álava, Teruel and Jaen, with decreases of 7.8%, 6.7% and 6.3%, respectively. Cordoba, Pontevedra, Palencia, Burgos and Zaragoza also saw prices depreciate by more than 3%.

When comparing the provinces to pre-crisis levels, the largest adjustment is in Toledo which has seen depreciation of 55.1% since 2007. Zaragoza and Guadalajara also saw falls of over 50% registering cumulative declines of 54.3% and 54.1%.

Selling

When selling a property in Spain, the average time required from putting the property on the market to closing a sale is currently 10.5 months. However, in Cantabria the average time required is 19 months, while sellers in Avila require an average of 17.1 months to close a sale. At the other end of the table Ceuta, Melilla, and the provinces of Las Palmas and Madrid have average selling times below seven months.

As previously mentioned, Barcelona and Madrid have seen increases in value and the demand for property in those areas is also reflected in the time required to sell. In both cities the average time required to sell is less than six months (5.9 in Barcelona and 5.6 in Madrid). In the city of Valencia, the trend is reversed with the average time to sell being over a year, standing at 13.2 months.

Personal Situation

As the rate of decline in property values has been more pronounced than the reductions in wages and the cost of living, the requirement to purchase a property (to afford mortgage payments) during 2015 was 22% of household income, compared to the 33% that was required in 2007. Only Malaga exceeded this average. Buyers in the Andalusian province will require 33% of gross household income to purchase a property.

In both Zaragoza and Valencia, the requirements are well below the national average with 19% and 17% respectively.

The requirement in Barcelona is 23.3%, while Madrileños require 21.5% and those in Seville will need 20.5% of household income. The area with the highest requirements is the district of Sarria-Sant Gervasi (Barcelona), where buyers will need 39.9% of household income to pay a mortgage.

When looking at the requirements in terms of yearly salaries, the current requirement is 6 years’ salary, compared to 8.1 years during the boom years. In Malaga, however, eight years’ salary would be required, while buyers hoping to purchase on the Balearic Islands will have to fork out an average of 14 years’ salary. This is mainly due to the busy residential market on the islands aimed primarily at foreign buyers.

You can see the full report here (in Spanish).

 

Licences for Housing Increased in January

The once familiar cranes are returning to Spain
The once familiar cranes are returning to Spain

As I’ve been saying lately, the Spanish property market is recovering well from the tumultuous few years following the crisis and the number of building licences issued in January this year appears to back me up.

January saw an increase of 39.7%, when compared to January 2015, in the number of building licences issued with 4,774 authorised new constructions, according to data released by the Ministry of Public Works.

47.8% More Apartments

Of the total, 3,572 licences were issued for apartments within a block representing an increase of 47.8% over the same period last year. Licences for single-family homes increased by 20.3% with 1,201 new properties given the go-ahead.

This continues the upward trend that began in 2014, a year which saw the first positive signs following seven years of negativity, and culminating in 2015 with the number of licences up to 38,873, an increase of 1,.7%.

The Spanish property market suffered terribly after the 2007 crisis with 2013 marking a record-low in the number of construction licences approved, down to 34,288 units. This was less than a tenth of the 2006 peak of 865,561 licences, a collapse of 96%.

 

Q1 2016 Saw Property Prices Fall 0.7%

Prices have gone up and down across the country
Prices have gone up and down across the country

Property portal Idealista have released data showing the prices of resale property in Spain fell an average of 2.8% during Q1, 2016, when compared to the same period in 2015.

A square metre will now cost an average of 1,552 Euros compared to 1,597 Euros 12 months ago.

However, the results are very different when looking at different areas of Spain.

In Barcelona, for example, you will now see an average cost per square metre of 3,478 Euros, an increase of 6.6% on the inter-annual rate. However, prices in the city are still 26.9% lower than during the peak of 2007.

Madrid saw a 2.2% average increase leaving a square metre at 2,832 Euros. Again, this is far below the pre-crisis peak when the same space would have cost you 4,035 Euros.

Despite the community of Valenciana seeing a drop of 2.2% in the inter-annual rate, property owners in Valencia city have seen their property values increase during the first quarter by an average 2.9% over the same period in 2015, leaving a square metre costing 1,471 Euros. This is 47.5% lower than the pre-crisis peak prices.

The two island communities, The Canary Islands and The Balearic Islands both saw increases in the average cost of a square metre with inter-annual increases of 4.1% and 3.9%, respectively.

Andalucia and the Costa del Sol

In Andalucia, the average price has fallen a slight 0.2% in the inter-annual rate, leaving a square metre costing 1,385 Euros.

Of the Costa del Sol areas it appears most are well into the recovery and many have seen price increases, some quite substantial. For example, in Manilva, prices have increased 15.7% in the last 12 months meaning you will now be looking at 1,324 Euros per square metre.

Estepona, Torremolinos and Coin also saw increases well above average with prices going up 7%, 6.3% and 5.6%, respectively.

In Marbella, arguably the most famous area of the coast, prices have increased by an average of 4.8% leaving a square metre with a cost of 2,425 Euros. At the end of Q1 in 2015 this cost was 2,313 Euros.

Of all the towns in Andalucia the majority finished the quarter on a positive with the exception of Antequerra, Caleta de Velez, Cártama, Ronda, Torre del Mar and Torrox.

This confirms the general feeling amongst agents here on the coast who have noticed a renewed interest in property for sale, as well as a very notable increase in tourist numbers. Some of the increases are due to security concerns in other countries with many tourists feeling Spain is the only “safe” option for a European holiday. These threats are not likely to continue indefintely and we will surely see a drop-off in tourist numbers as people start once again to visit Turkey, Tunisia, Greece, Cyprus and Egypt, all countries that have suffered of late. Hopefully, by the time that happens Spain, and specifically the Costa del Sol, would have had a great year for both tourism and the beleaguered property market.

You can see the full report from Idealista here.

Tourist Numbers Increased 14% In February

Tourist numbers continue to rise
Tourist numbers continue to rise

Tourists continue to flock to Spain as other once favoured destinations are avoided due to continuing security fears.

February saw 3.7 million international tourists travel to Spain representing a 13.7% increase over the same period in the previous year, according to data released by the National Statistics Institute.

British tourists came in the largest numbers, once again, accounting for 22% (806,835) of the total arrivals during February. This representas an increase of 17.1% when compared to February 2015.

French and German tourists were the second largest groups with 529,716 and 481,219, respectively. French travellers increased by 8.5% on the annual rate, while Germans increased by 7.4%.

The UK, France and Germany have long been the largest source of tourists for Spain but this year has seen increases in numbers from other countries too. Traveller numbers from Russia have increased substantially showing a 19.8% gain, when compared to Feb 2015. American traveller numbers increased by 18.4% while the number of tourists from Ireland grew by 17.3% during February.

Tourist Destinations

The Canary Islands proved to be the most popular area attracting 30.3% of the total travellers. This was followed by Catalonia with 25.3% of the total, while Andalucia accounted for 13.4%.

The Canary Islands saw a 10.5% increase, when compared to the same period in 2015, rising to 1,114,737 tourists. The majority came from the UK with 31.9% of the total, while Nordic countries accounted for 22.3%.

The number of tourists visiting Catalonia during February increased by 13% over the same month in 2015, to over 930,000, while Andalucia saw annual growth of 14.3%, representing almost half a million tourists.

The Balearic Islands saw phenomenal growth for February with an annual increase of 42.1%. This has been put down, in part, to increased supply of accommodation. Valencia saw an increase of 24.4% whle Madrid saw gains of 12% over 2015.

Where, Why, and How long?

Hotel stays increased by 16.3% during February while the numbers renting a private property for their stay fell by 2.1% on the annual rate.

The number of tourists staying with friends or family rose by 13.6%.

The main reason stated by travellers for the visit was leisure, recreation and holidays, accounting for 2,814,038. This represents annual growth of 7.3%.

Business travellers represented 439,747 visitors during February, a huge 45.4% increase, while 37.4% of travellers stated “other” as their reason for travelling.

The number of travellers that stayed for between four and seven nights increased 17.1% to 1.8 million, while 681,851 travellers stayed for between eight and 15 nights. Long stay travellers (more than 15 nights) increased by 6.5% on the annual rate to 275,876.

Semana Santa (Easter) came early this year and has just passed. It was very, very busy with unusally hot weather for this time of year adding to the madness. Marbella and Puerto Banus were chaotic! The roads were jammed, parking was scarce and the beaches were full. I look forward to seeing the offical figures for March and expect them to be high!

If the trends of the first few months continue then 2016 is going to be a great year for tourism!