Foreigners Invested More in Spain in 2015

Foreign residents invested heavily during 2015
Foreign residents invested heavily during 2015

As we continue to see markers suggesting the Spanish property market has recovered from the crisis, the Ministry of Public Works has released data that corroborates what we’ve been seeing.

During 2015, investment in real-estate by foreign residents increased by 15% compared to the previous year. In monetary terms this amounts to 9,918.6 million Euros.

The data shows that of the total investment, the vast majority was for resale, or second-hand, properties accounting for 8,808.6 million Euros of the total. The remaining 1,110 million Euros was invested in new-build properties.

When comparing the data to 2014 we see that the resale market has increased by 14.5% while the market for new-build property grew by 18%, El Economista reported.

There are no surprises when looking at the regional distribution of the invested monies. Andalucia attracted the most investment from foreign residents accounting for 2,255.6 million Euros. The usual suspects, Valencia and Catalonia, predictably came close with 2,202.3 million and 1,797.2 million Euros of foreign investment, respectively.

 

Property Discount is No Guarantee of a Sale

Selling your property became more difficult in 2015, according to data released by online property portal Fotocasa.

Owners who had a property for sale in 2015 found they had to reduce the original asking price by an average of 14% in order to sell. This is the equivalent of 33,400 Euros, one percentage point below the previous year. Fotocasa reported that the 14% decrease was the slightest reduction required to sell over the last six years, and indicates a continuing recovery in the property market.

Discounts Applied to Properties by Year

On average, 36% of owners who put their property on the market were able to close the deal, an increase over 2014 when only 28% of owners managed to sell. On average it took 10.6 months to sell a property, one month shorter than in 2014 when it took an average of 11.5 months.

In 2015, 44% managed to sell their property in under six months, while 25% needed between seven and 12 months to sell. A further 16% took between 13 and 24 months while 15% took over two years to complete a sale.

Beatriz Toribio from Fotocasa, said “The housing market has not yet recovered, but has been reactivated and therefore is more dynamic than in the worst years of the crisis. In 2015 those who managed to sell their property took less time to complete and applied a lower discount. But to sell, you need to lower the price: 81% of the owners who sold a property in 2015 had to do this,”.

Type of Residence

Of the sellers surveyed for the report, 46% said the property they sold was their main residence, followed by those selling a second home (22%), while a further 18% said the property sold had been inherited.

By types of property 52% were flats and 19% were houses. Apartments made up 7%, with 4% being duplex properties, and 4% penthouses.

Price Reductions Don’t Guarantee a Sale

According to the data, 64% of properties for sale in 2015 failed to sell, despite an average time on sale of 14 months. Of those that didn’t sell, 66% said they had applied a discount to the asking price with an average discount of 14% of the asking price. This translates into 32,797 Euros but this was not a guarantee that the property would sell.

Toribio explained that “The price is one of the factors that influence the purchase of a house, but also the location, distribution, quality and housing characteristics. Not everything is sold,”.

Despite the findings the survey also showed that there is still some resistance to reducing prices with 52% of owners who did not manage to sell said they had not applied a discount and were not willing to do so.

“For the first time during a study we found owners who, despite not selling, are reluctant to lower the asking price, which is very surprising after all that has happened in the housing market,” added Toribio.

How to Sell?

The data also shows that more people are turning to Spanish real-estate agents in order to market and ultimately sell their property. 68% of people who sold their property in 2015 did so through an agent.

Sellers citied the main reasons for using agents rather than selling privately as being the quality of potential buyers (43%), convenience (24%), and avoiding red-tape (16%).

You can read the full report here.

Housing Price Index (HPI) – Q4 2015

At the closing of the fourth quarter, the annual variation of the HPI decreased three tenths to 4.2%

In terms of the type of housing, the rate actually increased 1 point for new property to 5.8%, while the annual variation for resale property dropped half of one point to end the year at 4.0%.

What this means for house prices is that new home prices rose by 1.3% above the base. For resale properties prices fell by 0.3%.

When looking at annual variation by autonomous community most regions saw a decline. The largest decrease was recorded in Cantabria which fell 2.8 points to finish the year at 2.0%, while Asturias saw a drop of 2.2 points to end at 1.3%. Andalucia also registered a decline dropping 1.4 points to finish at 3.0%

The region with that registered the largest increase was Valencia whose rate increase nine tenths to 3.0% and the Basque Country which saw an increase of seven tenths, to 1.7%.

Once again, when looking at the quarterly variation most regions saw a negative figure. The largest decline was seen in Asturias which recorded a 2.5% fall, followed closely by Cantabria and Galicia which both recorded variations of -1.4%. The highest quarterly rates were records in Basque Country and La Rioja with both at +0.7%. Andalucia recorded a small drop of seven tenths.

House Price Index Q4 2016, Spain

 

2015 Saw Large Increase in Mortgage Lending

As buyer confidence increases in the Spanish property market, so too does the confidence of banks to lend, although they are still a way off the amounts loaned in 2011 which was followed by two years of decline. In 2014 we saw a slight increase in lending.

In 2015 the total number of mortgages approved for homes was 244,827, a massive increase of 19.8% over 2014. The total number of approved mortgages was 369,588. When looking at the types of properties being mortgaged there is an increase in numbers across the board:

  • 18,566 Rustic Properties (4.7% increase)
  • 351,022 Urban Properties (17.9% increase)
  • 244,827 Dwellings (19.8% increase)

Following a few tumultuous years in the mortgage world it seems the banks have now normalised their reserves and are once again ready to lend although the average amount mortgaged has dropped slightly sitting at €129,214 (-0.8%).

In general, the total amount loaned throughout 2014 increased by 16.2% to a massive 47,756 million Euros.

New mortgages 2015

By Region

As mentioned in a previous article, Spanish property sales are on the up and this is reflected in the number of new mortgages with the same regions topping the charts.

Andalucia saw the most new mortgage approvals in 2015 registering 45,971 of the total, an increase of 20.4%. Madrid and Cataluña followed close behind with 42,382 (19.6% increase) and 38,583 (25.9% increase), respectively.

In terms of percentage increase, the Balearic Islands topped the list with a massive 41.4% increase in mortgage approvals despite only 8,300 new loans.

The only autonomous region to record a drop was the tiny Spanish enclave of Ceuta on Africas North coast, registering -11.6%.