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.

 

Advertisements

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.

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).

 

More Mortgages Written in January

Despite the number of property sales falling slightly at the start of the year, when compared to last year, the number of new mortgages written in Spain increased in January by over 10% with 23,275 new mortgages recorded.

Also on the increase is the average amount of the mortgages written which increased by 14.2% compared to January 2015, to stand at 133,461 Euros.

The total value of mortgages written on urban properties amounted to 4,229.4 million Euros, representing a 16.3% increase over the previous year. Of those, the amount borrowed against residential property increased by 10.8% to 2,459.7 million Euros. Mortgages on residential properties accounted for 55.3% of capital borrowed in January.

Interest Rates

The majority of new mortgages written in January (89.8%) were variable rate mortgages, compared to only 10.2% on a fixed rate. In 94% of cases interest was based on the Euribor rate which has been consistently low in recent months.

The average rate of interest applied to new mortgages in January was 3.21% with the average term being 22 years. On residential property the average rate was 3.27%, representing a slight fall of 0.4% compared to January 2015.

By Community

Andalucia, Madrid and Catalonia registered the highest amount of new mortgages with 4,684, 3,976 and 3,857 new mortgages, respectively.

By growth, the winning communities were Castilla-La-Mancha which saw a 30.4% increase, followed by Madrid with 22.9% more mortgages and Andalucia with 22.2% more than in January last year.

When comparing communities based on the total amount of borrowed capital Madrid easily dominates with 576.9 million euros lent out during January. Catalonia followed with 457.2 million and Andalucia with 411.8 million Euros.

The largest monthly variation recorded, when compared to the previous month (Dec 2015), was Castilla y León which saw an increase of 53%, while the number of mortgages written in Castilla-La Mancha increased 43.6%.

The only two communities that recorded a fall in the number of mortgages written were Cantabria (-10.9%) and Galicia (-8.0%).

Read the full report here: INE (in Spanish).

 

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!

 

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.

 

Spanish Hotels Enjoyed a Busy February

February was another great month for tourism in Spain with the number of overnight stays increasing to 16.3 million, an increase of 12.4%, when compared to the same month in 2015.

Hotels reported an average cost per night of 76.6 Euros, representing an annual increase of 7.9%.

The increase in overnight stays applies to both Spanish residents and non-residents with increases of 11.2% and 13.3% respectively. The average length of a stay was unchanged when compared to the previous year, standing at 2.9 nights per traveller.

Cumulatively, the first two months of 2016 showed an increase of 10.4% over the previous year.

Overnight Stays Spain Feb 2016

Destinations

Andalucia topped the list of most popular destinations with Spanish resident travellers with an increase of 15.1% in the number of overnight stays in the region. Madrid followed closely with a 13.3% increase while Valencia and Catalonia also managed significant increases registering increases of 14.2% and 11.1% respectively.

For non-residents the first choice destination was the Canary Islands who claimed 51.1% of all overnight stays, an increase of 10.6%. Following in second place, but quite some way behind, was Catalonia who recorded 14.7% of the total overnight stays, an increase of 17.2% over the same period last year. Andalucia was next with a 10.3% increase, representing 11.9% of the total overnight stays during February.

Hotels

Hotels reported 49.1% occupancy for February, showing an annual increase of 7.6%. When looking at only the weekends, occupancy increased 6.4% ending the month with an average of 57.2% occupancy.

Hoteliers on the Canary Islands recorded the highest occupancy rates for the month with 77.9%, closely followed by Madrid and the Balearic Islands, with 53.4% and 48.9% respectively.

Within the islands, Gran Canaria reported the highest rates with 83.3% occupancy by number of available places, while Tenerife recorded the highest weekend occupancy, interestingly also 83.3%. The highest number of overnight stays on the islands was Tenerife with more than 2 million overnight stays recorded during February.

Travellers by Origin

The UK remained the largest source of travellers for February accounting for 23.8% of tourists, a massive 22.0% increase over last year. The Germans followed closely with 20.4% of travellers arriving from Germany, an increase of 2.3%.

Other European countries also saw an increase in travellers to Spain. French travellers increased 9.7%, Swedish by 16.6% while the number of Italian travellers increased 16.7%.

Profits

The increase in traveller numbers is great news for the hotel industry. The daily average price charged per occupied room was 76.6 Euros during February, representing an increase of 7.9% over the same period last year.

When looking at the hotels by category, the average turnover per occupied room was 171.2 Euros in a five-star hotel, with averages of 80.7 Euros for four-star, and 57.9 Euros for three-star. By number of available rooms, the average turnovers for five, four and three-star hotels were 111 Euros, 53.7 Euros and 33.8 Euros, respectively.

 

Property Prices Up 2.7% in February

In February the average price of finished housing (new and used) in Spain, showed an increase of 2.7% to 1,346 points.

Data released by Tinsa shows the Spanish property market remains positive. Furthermore the increase for this period show a great year-on-year increase following the steep decline in the same period last year which took the index back to May 2003 levels, the lowest since the global financial meltdown.

The “Mediterranean Coast” and “Capitals and Major Cities” showed the biggest gains showing interannual variations of 6.1% and 4.6% respectively.

Despite the country as a whole showing a cumulative increase of 2.7% the country’s smaller towns (“other municipalities”) remain low, lower than the same period last year.

From the crisis of 2007, the average price adjustment now stands at 41%.

Not forgetting the decline of 2015 the areas included in the Mediterranean Coast showed the largest annual increase despite showing a slight decline of -0.1% during January and February, 2016.

The Balearic and Canary Islands registered an increase of 2.5% in February, when compared to the same period in the previous year, while “Metropolitan Areas” show an average increase of 1.5% over the last 12 months.

Despite the positive news and outlook prices are still a way off pre-crisis levels. The steepest declines are in the Mediterranean Coast (-48.1%), Metropolitan Areas (-44.7%) and Capitals and Large Cities (-44%). The cumulative adjustment is now below average in The Balearic and Canary Islands having recorded a fall of 30.7% since 2007, and also in Other Municipalities where prices have fallen 36.5%

Spain - House Prices Increase 2.7% Feb 2016

The Tinsa IMIE is calculated from housing appraisals and each month collects the change in the cost of a m2 of a building and compares it to 2001. The absolute numbers (points) correspond to the value of the index and are not relate to the price per square meter.

 

2016 Shows A Good Start For Tourism

Following a record breaking year for tourism, Spain has seen a continued increase in tourist spend at the start of 2016.

In January the total expenditure by international tourists stood at 3,712 million euros, a 3.6% increase over the same period in 2015. This shows a continuation of the record number of tourists that visited Spain last year thanks, in part, to security concerns at other popular destinations like Egypt, Turkey and Tunisia.

The average daily spend went down slightly to €119 per day, a decline of 0.7% while the overall average spend per tourist per visit also dropped to €1,056 euros, an annual drop of 6.9%.

The average duration of visits also saw a decline with tourists staying for an average of nine days representing a decrease of 6.3% over the same period last year.

Package Holiday V’s Non-Package Holiday

Spending by persons as part of a package holiday was 739 million euros, while non-package holiday visitors spent 2,974 million euros. This can be further broken down as follows:

  • Transport – 805 million Euros (a 10.4% increase)
  • Accommodation – 428 million Euros (a 17% decrease)
  • Activities – 727 million Euros (a 10.7% increase)
  • Maintenance – 613 million Euros (a 0.4% increase)
  • Other – 401 million Euros (a 6.5% increase)

Last of the Big Spenders

As expected, visitors from the United Kingdom spent the most (in line with the number of tourists) with Brits accounting for 618 million Euros, 16.7% of the total.

Nordic countries including Denmark, Finland, Norway and Sweden, followed close behind with spending of 491 million Euros, representing 13.2% of the total. German tourists, on the other hand, saw a decline accounting for 12.4% of tourist spending.

Comparing to January 2015, both the Brits and Nordic tourists increased spending with 7.3% and 4.1% increases respectively. In contrast, German tourist spending saw a decline of 9.5%. French and Italian tourists also saw an increase in expenditure of 8.5% and 2.9% respectively.

In terms of location, the spending was concentrated in the Canary Islands with 32,6% of the total spending. Catalonia followed with 19.2% of the total and Andalusia with 15.4%.

Comparing to the previous year, the Canary Islands saw a decrease of 5.1%, while Cataluña and Andalucía saw increases of 17.7% and 11.6% respectively.

In other areas spending increased 7.5% in Valencia and 6.8% in Madrid while the Balearic Islands saw a decrease of 3.8%.

Tourist Spend by Autonomous Community, January 2016

Business or Pleasure?

From the total amount spent, 74.4% was spent by tourists visiting for leisure, representing a 2.4% drop over the same period last year.

Tourists visiting for work or business accounted for 9.9% of the total, or 369 million Euros. It is worth noting that this represents a massive increase of 30.5% over January 2015.