Average mortgage value increases in June

Mortgage applications increased 1% in June

The average value of new mortgages in Spain increases 1.0% in June 2012, compared to the same month last year. The average value now stands at 122,487€.

This is according to figures released by the National Institute of Statistics. The main points of the press release are below.

Mortgage Statistics – June 2012

During the month of June, the average amount of mortgage constitutions recorded in the land registries stood at 122,487 euros, a figure 1.0% higher than the same month the previous year and 9.1% higher than that recorded in May 2012.

In the case of mortgages constituted for dwellings, the average amount was 107,507 euros, 2.6% less than in June 2011, and 6.3% higher than that registered in May 2012.

The value of the mortgages constituted on urban properties was 4,672 million euros in June, indicating an interannual decrease of 20.8%. In dwellings, the capital loaned exceeded 2,614 million euros, 27.2% less.

Mortgages by institution

Banks were the institutions that granted the largest number of mortgage loans in June (75.3% of the total), followed by Savings Banks (10.2%) and Other financial institutions (14.5%).

Regarding the capital loaned, Banks granted 74.4% of the total, Savings Banks 10.5%, and Other financial institutions 15.1%.

Mortgage interest rates

The average interest rate in June 2012 was 4.32%, indicating a 4.8% increase in the interannual rate, and a 0.1% decrease as compared with May 2012.

By institution, the average interest rate of Savings Bank mortgage loans was 4.40%, and the average term was 23 years. Regarding Banks, the average interest rate for mortgage loans was 4.43%, and the average term was 21 years.

94.3% of the mortgages constituted in June used a variable interest rate, as opposed to the 5.7% that used a fixed rate. Within the variables, the Euribor was the reference interest rate most used in constituting mortgages, specifically in 84.5% of new contracts.

Mortgages with registration changes

In June, the total number of mortgages with changes in their conditions recorded in the land registries stood at 29,840, with an interannual increase of 0.5%. For housing, the number of mortgages with modified conditions decreased 0.1%.

Considering the type of modification of the conditions, in June 25,225 novations (or modifications produced within the same financial institution) were produced, for an interannual decrease of 2.5%. The number of transactions that changed institutions (subrogations creditor) was 3,258, that is 23.1% more, as compared with June 2011. In turn, 1,357 mortgages changed the holder of the mortgaged property (subrogations debtor), which implied an interannual increase of 16.2%.

Registered mortgage cancellations

In June, 37,828 mortgage cancellations were registered, 4.5% less than in the same month of 2011. Mortgages cancelled on rustic properties decreased 7.3%, whilst those cancelled on urban properties decreased 4.4%. Cancellations of mortgages on dwellings decreased 7.8% in the interannual rate.

You can read the full press release here: Mortgage Statistics – June 2012

June shows 14.4% decrease in property sales

Property transfers decreased in June

The number of property sales in June was 54,447 representing a decrease of 14.4% compared to the same period last year, and a decrease of 9.3%, as compared with the previous month.

This is according to figures released by the National Institute of Statistics (INE) which shows that of the total 25,405 were residential showing a decrease of 11.4%.

Statistics on Transfer of Property Rights – June 2012.

The number of property transfers recorded in the land registries, from public deeds previously registered, was 130,294 in June, that is, 8.1% less than for the same month in 2011, and 8.1% lower than in May 2012.

In the case of registered merchantings of property, the number of transfers was 54,447,representing an interannual decrease of 14.4%, and a decrease of 9.3%, as compared with the previous month.

Merchantings recorded in the land registries

84.9% of the registered merchantings corresponded to urban properties and 15.1% to rustic properties. Among the urban properties, 55.0% were merchantings of dwellings.

The number of merchantings of rustic properties decreased 7.8% in the interannual rate in June, while that of urban properties decreased 15.5%. Within the latter, merchantings of dwellings decreased 11.4%.

Registered merchantings of dwellings, by protection system and status

87.3% of transfers of dwellings by merchanting in June were free housing, and 12.7% were protected housing. In interannual terms, the number of transfers of free dwellings by merchanting decreased 10.1% and that of protected dwellings decreased 19.6%.

47.7% of the dwellings transferred by merchanting in June were new, and 52.3% were used. The number of transactions on new dwellings decreased 12.3% and the number of used dwellings decreased 10.6%, as compared with June 2011.

You can see the full press release here: Statistics on Transfer of Property Rights – June 2012

Tourist numbers and spending increase

Tourist spending is up, despite the crisis

According to new figures released by the Ministry of Industry, Energy and Tourism, over 6 million visitors arrived in Spain in June 2012, an increase of 2.2% over the same period last year.

The total expenditure by tourists also increased to a total of 5.833 million euros, up 8.7% from June 2011.

For the first half of the year, from January to June 2012, the total number of tourists visiting Spain increased to 25,150,430, a 4.7% increase over the same period in 2011.

In the first half of the year, non-residents accumulated a total expenditure of 23.644 million euros, a growth of 5.6%. The average expenditure also showed an increase of 2.5% per tourist, and an increase of 9.4% to the daily average spend.

UK tourist spending showed a growth of 17.9%, which amounts to 200 million euros expenditure. This increase, far higher than the national increase (8.7%), was also due to increased average spending per visitor (9.2%). The Balearic Islands were the destination of choice for UK tourists.

The number of German tourists recorded a second consecutive month of growth with a 5% increase. The Canary Islands captured the bulk of the German influx with an increase of over 60%. The average daily spending fell for the second straight month by -2.6%.

In Andalucía, tourist spending volume increased by 1% despite a decline in the number of tourists of -4.6%. This was due to an increase of 5.5% in the average spending per person. This represents the first increase in this area following five months of falls.

The total expenditure of tourists who opted for non-hotel accommodation increased by 12.2%, a greater increase than for hotel accommodation which increased by 7%.

Package-holiday tourists showed strong growth with an increase of 14.3%. The number of non-package travellers held constant but their total spending showed an increase of 5.9%, due to the increase in average spending per person of 6.6%. The majority of the increase in spending can be attributed to trips made for leisure.

You can read the complete report here (in Spanish): Tourists Expenditure – June 2012

June Imie Index 2012 – Tinsa

Sharp decline in prices in major cities

Tinsa have released their house price index report for June 2012.

The year-on-year decline in the IMIE General index slowed slightly in June to 10.8% after the index reached 1589 points. The cumulative decline in house prices since the top of the market in December 2007 reached 30.4%.

By region, “Capitals and Major Cities” recorded the sharpest year-on-year decline in June of 13.5%, closely followed by the municipalities of the “Mediterranean Coast”, which fell by 13.3% compared to the same month in 2011, and “Metropolitan Areas”, which fell by 11.6%. The decline was greater than the market average in all three areas.

Behind these were once again “Other Municipalities”, which fell year-on-year by 7.3%, and the “Balearic and Canary Islands”, which were ranked last with a decline of 6.8%.

In terms of the cumulative decline in house prices since the top of the market by region, the “Mediterranean Coast” recorded a fall in June of 38.3%; followed by “Capitals and Major Cities” with 33.8%, “Metropolitan Areas” with 31.9%, the “Balearic and Canary Islands” with 25.4% and “Other Municipalities”, which refers to those not included in the other categories, with 24.5%.

You can download the press release here: June Imie Press Release and the index from here: June Imie Index 2012

About the IMIE – Spanish Property Market Index
The IMIE Index, a pioneering initiative launched by Tinsa in 2008, is an index that reflects the valueof residential property in Spain. It is governed by market criteria in terms of its geographical segmentation. Based on these guidelines, Tinsa has subdivided Spain into five major categories that represent the segments of the residential property market: Capitals and Major Cities with a population of 50,000 or more, Metropolitan Areas, the Mediterranean Coast, the Balearic and Canary Islands and Other Municipalities.

The IMIE Index records the variation in the m2 value of a property, calculated using the information from more than 200,000 residential valuations carried out by Tinsa every year, based on the methodology similar to that used for calculating the CPI and other international monthly price indices.

About Tinsa
Tinsa is a leading multinational for property valuation, analysis and advice. Founded in 1985, the company has 32 regional offices in Spain as well as permanent offices in France, Portugal, Argentina, Chile, Mexico, Peru and Colombia, although it operates in more than 25 countries. Since November 2010 Tinsa has been owned by Advent International.

Tinsa’s range of services includes real estate analysis and valuation, consultancy, and valuation of other types of tangible and intangible assets, among others. For more information please visit http://www.tinsa.es.

Benalmádena mayor ousted by PP

Paloma García Gálvez, Elías Bendodo and Francisco Salido. A. S.

It happened in 2009 and it has happened again in 2012. The Socialist mayor of Benalmádena, Javier Carnero (PSOE), is to lose control of the Town Hall for the second time thanks to a motion presented by the PP and UCB councillors. In 2009 he had completed two years of his term of office; this time he has only lasted a year.

Until now the Socialists have controlled the local authority thanks to a coalition with councillors from the independent UCB group and IU. Last week three of those UCB councillors have signed the proposal for a vote of no confidence made by the PP, who were the most voted party in 2011 with eleven councillors.

According to the new agreement Paloma García Gálvez will be the new mayor of Benalmádena and UCB leader, Francisco Salido, will be first deputy. The UCB councillors will keep the same responsibilities held at present while the PP will take over the departments run by the PSOE and IU members. The motion will be formally voted at a special council meeting on June 23rd.

The coalition formed by the PSOE, IU and independents in Benalmádena in 2011 came as a blow to the Partido Popular who saw a red patch appear on what otherwise is a totally conservative blue Costa del Sol. Now the PP have managed to fill the gap. Provincial party president Elías Bendodo justified the vote of no confidence by the “ungovernability” of the municipality due to the attitude of “permanent blockade” shown by the PSOE and IU. “Today Benalmádena starts its future”, said the proposed new mayor Paloma García Gálvez. Javier Carnero said that the motion could only be justified by “personal and party interests” adding that this was a sad “déjà vu”.

Source: Sur In English

Average price of new homes falling

New house prices still falling

The average price of new housing in provincial capitals in Spain is still falling showing a decline of 5.5% for the year up to June 2012.

The drop represents a cumulative fall of 30.1% since the peak in 2007, according to a report from the Valuation Society (Sociedad de Tasación).

The main points of the report are:

• The average price of new housing in the provincial capitals is €2,286 per square metre constructed. This transaltes into a price of €205,740 for a house of 90m².
• In the provincial capitals the half-year price reduction (-3.8%) has increased from the last half of 2011, which was -1.8% and compared to the first half of 2011 which was -2, 3%.
• The reduction in the average price over the last twelve months in the provincial capitals has been -5.5%, up 0.8 points on the previous year (2010-2011), which was -4.7%.
• During the period January to June 2012 the average price of new housing has decreased in all capitals. This decrease is more than 5% in 23 of the capitals and between 0 and 5% in 27.

The capitals with highest prices per square metre are San Sebastian (€3,548 p/m²), Barcelona (€3,537 p/m²) and Madrid (€3,045 p/m²), with respective variations in the first half of -1.5%, -3, 7% and -4.6%.

The report suggests that the housing market is continuing to decline with little change to the stock of properties for sale which is being hampered by the general state of the country’s economy.

The housing market is suffering an important deceleration in productivity resulting from a significant reduction in sales volumes. This is most noticeable in tourist areas and in peripheral areas of medium sized towns.

Despite the falling sales figures the Valuation Society suggest there is still demand for housing but the “significant dependency” on the economic conditions and the difficulties financing a property purchase are likely to delay a full recovery for the real-estate sector.

The increase in supply of new homes for rent, in some cases with an option to buy, continues to be an increasingly popular option across Spain.

You can see the full report here (in Spanish): New Housing June 2012

Pensions in Andalucía fourth lowest in Spain

Southern Spain may be a great place to live for most people but not so for old age pensioners as residents in Andalucía receive lower pension payments than in all but three of Spain’s regions.

The average pension in Andalucía was €757.31 in June which is €72.26 below the national average of €829.57.

The regions that beat Andalucía to the bottom of the list are Murcia, Extremadura and Galicia where the average pension is €730.50, €704.31 and €696.14 respectively.

Only seven regions have higher than average pensions. They were The Basque Country with an average of €1,024.74, Asturias where pensions average €984.78, and Madrid with €981.51.

The total paid for pensions in June across Spain was 7.38 billion euros, representing an increase of 4.3% compared to the same period in 2011, according to data from the Social Security and Employment ministry.

More downgrades for Spanish banks

Further downgrades for Spanish banks

Following Spain’s formal request for assistance Moody’s have downgraded the credit rating on 28 Spanish banks.

Moody’s summarise the downgrades in a press release as follows:

Moody’s Investors Service has today downgraded by one to four notches the long-term debt and deposit ratings for 28 Spanish banks and two issuer ratings.

Today’s actions follow the weakening of the Spanish government’s creditworthiness, as captured by Moody’s downgrade of Spain’s government bond ratings to Baa3 from A3 on 13 June 2012, and the initiation of a review for further downgrade. For more details on the rationale for the sovereign downgrade, please refer to the press release (http://www.moodys.com/research/Moodys-downgrades-Spains-government-bond-rating-to-Baa3-from-A3–PR_248236).

Moody’s adds that today’s downgrades of the long-term debt and deposit ratings also reflect the lowering of most of these banks’ standalone credit assessments.

The debt and deposit ratings declined by one notch for three banks, by two notches for 11 banks, by three notches for ten banks and by four notches for six banks. The short-term ratings for 19 banks have also been downgraded between one and two notches, triggered by the long-term ratings changes.

Today’s actions reflect, to various degrees across these banks, two main drivers:

(i) Moody’s assessment of the reduced creditworthiness of the Spanish sovereign, which not only affects the government’s ability to support the banks, but also weighs on banks’ standalone credit profiles, and

(ii) Moody’s expectation that the banks’ exposures to commercial real estate (CRE) will likely cause higher losses, which might increase the likelihood that these banks will require external support.

This notwithstanding, Moody’s views positively the broad based support measures being introduced by the Spanish government to support the Spanish banking system as a whole. Moody’s will assess the impact of the upcoming recapitalization on banks’ creditworthiness and bondholders once the final amount, timing and form of funds flowing to each individual bank are known.

The ratings of both Banco Santander and Santander Consumer Finance are one notch higher than the sovereign’s rating, due to the high degree of geographical diversification of their balance sheet and income sources, and a manageable level of direct exposure to Spanish sovereign debt relative to their Tier 1 capital, including under stress scenarios. All the rest of the affected banks’ standalone ratings are now at or below Spain’s Baa3 rating.

In addition, Moody’s has also downgraded (i) the ratings for senior subordinated debt and hybrid instruments of affected entities; (ii) all rated government-backed debt issuances from Spanish banks; and (iii) the long-term debt ratings of Instituto de Credito Oficial (ICO), which are based on an unconditional and irrevocable guarantee from the Spanish Government.

Please click this link http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_143393 for the list of Affected Credit Ratings. This list is an integral part of this press release and identifies each affected issuer.

You can see the full press release here: Moody’s downgrades Spanish banks

Spain to officially request a bailout

Economy minister Luis de Guindos

Eurozone leaders are today expecting Spain to formally request up to 100 billion euros to recapitalise it’s banking sector.

Discussions are expected to take place this week to agree on the details of the bailout leading to a European Union summit on Thursday night in which EU leaders will address Spain’s sovereign debt crisis.

Spanish economy minister Luis de Guindos says the details of the loan will be agreed in a  memorandum of understanding which will be discussed by eurozone ministers in July.

Spain has seen it’s borrowing costs steadily increasing over recent months twice tipping over the 7% mark. On top of this Spain’s admission last week that it does require aid has made investors nervous and fuelled speculation that Spain would need a full rescue similar to that of Greece, Ireland and Portugal.

As part of the load agreement EU leaders are likely to insist on a total restructuring of Spain’s banking sector including the possible creation of a “bad bank” to house bad property debts, and the forced liquidation of insolvent institutions.

Further discussion is also expected on where the money will go. Some suggest the money should go not to Spain’s government but directly into the banks as the government already has a large deficit. However one worry surrounding that option is the lack of control Europe will have over how the money is spent.

“Contracts are made among countries, not banks,” said German chancellor Angela Merkel.

“We will discuss this at the European summit, and this possibility is absolutely open to Spain if there is progress in the next few months,” Luis de Guindos said in Luxembourg last week. “The process of recapitalisation is not instantaneous.”

Spain’s banks need 62 billion euros

Spain needs up to 62 billion euros

In preparation for making an official request for a capital injection into it’s banking system Spain’s independent audit, required by the EU, has been completed.

Two independent audits by consultants Roland Berger and Oliver Wyman found the requirement for Spain’s banks to be between 51 and 62 billion euros, substantially less than was originally thought.

The 100 billion euros approved last week will provide Spain with a margin for error allowing the banking sector to cope with unforeseen circumstances or further losses. However, Spain has said that it’s three largest banks would not need extra capital even in a stressed scenario. The government also added that they would not close any more banks and those in trouble would be restructured.

In a meeting in Luxembourg yesterday European finance ministers agreed Spain should first apply to the euro zone’s temporary rescue fund, the European Financial Stability Facility. That loan would then be taken over by the permanent bailout fund the European Stability Mechanism (ESM) once it is up and running in July.

“The financial assistance will be provided by the EFSF until the ESM becomes available, and then it will be transferred to the ESM,” Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, said in a news conference.

“We would expect the Spanish authorities to put forward a formal request for financial assistance by next Monday,” he added.

Should Spain default then this loan would have to repaid first with all other creditors being pushed down the pecking order. However, because the loan will originate from the EFSF it will be issued without that requirement.

Yesterday Madrid sold 2.2 billion euros in medium-term bonds, attracting strong interest from domestic banks. Yields on 5-year bonds rose to a 15-year high of 6.07%, a level some analysts suggest is unaffordable for any prolonged period.

“They raised 2.2 billion versus a 2 billion target, so they can raise the money,” said Achilleas Georgolopoulos, a Lloyds of London strategist.

“Then the question is; are the yields threatening for the medium term? And yes, clearly they are much higher than the previous auction … But still they can continue for a few months to fund at these levels.”