The latest price increase in the real estate market encourages optimism while uncovering fears. Is it too late to play the trick of buying a home? Or is there still time to buy profitably?
The year 2017 has been positive for the real estate market, with a general increase in transactions and prices in the purchase of housing.
In this last variable, the increase has been the highest of the last ten years. The housing is averaging 4.2%, although with different scenarios on the map.
Certainly, this scenario leads us to remember some of the situations experienced a decade ago. With the boom of housing leading to a major housing crisis.
Can that situation recur? Is the market overheating? Are there still opportunities in the purchase of housing?
A few days after starting 2018, the experts try to explain a new residential scenario. Where the medium and long term wins the game to speculation, and the small national investor returns to take the helm of the market.
Market at various speeds
After raising the average price of housing by 4.2%, Spain has shown even more intensely the existence of a double and even triple housing market.
In the lead, the two big cities: Madrid and Barcelona. With a dynamic park that promotes municipalities in its area of ??influence.
Within walking distance, the provinces of Alicante, Balearic Islands, Canary Islands and Malaga continue to pick up pace. Thanks, to a large extent, to the foreign buyer. While other areas of the Spanish geography, housing prices are still falling.
The truth is that the last annual report of Tinsa has recorded increases of over 10% in a total of four provincial capitals: Madrid (+ 17.1%), Barcelona (+ 14.8%), Palma de Mallorca (+ 13.7%) and Pamplona (+ 12.5%).
Exceptional cases among which it is worth noting some districts of Madrid and Barcelona, ??where housing rises above 20%. specifically the Central district of Madrid (+ 21.1%) and the districts of Barcelona of Sants Montjuic (+ 26.5%) and Sant Martí (+ 24%).
Among the most solvent markets, a double effect is increasingly common. The overheating caused by the investor interest. And the lack of final ground.
With this, the purchase of housing can be directly affected. Whether you choose to transfer the price of the land to the final price, or if you decide to reduce the size of the houses to make them more affordable.
Is it still time to invest in housing?
Given the situation of cities such as Madrid or Barcelona, ??many buyers look askance at the real estate market. Therefore, it is worth listening to the opinion of some experts.
It’s not too late to buy a home. There are simply better opportunities for some customers. This seems to be the conclusion of Constanza Maya (Engel & Volkers) who recalls that ‘the professional investor has given way to the private investor, who buys thinking in the medium and long term, and has good business opportunities’.
From Foro Consultores, Luis Corral, points directly to the investor who seeks high returns through rent. ‘Today’s market is much more normalized. Therefore, we must get used to higher prices and lower profitability’.
In that sense, César Hernández (Appraisal Society), transmits encouragement to investors. ‘There is still a long way to go, with prices rising for a period of three or four years’. And, despite the latest revaluations, the post-crisis starting price was much lower than the real estate boom. Undoubtedly, ‘the urban center of the main capitals will continue to be profitable and prices will not fall’.
The ‘dangers’ for the real estate sector
Among the economic risks faced by the market, César Hernández takes the issue of iron out. “Any negative event takes between one year and eighteen months to move to the sector”, giving time for a change in strategy among investors.
Something similar to the political crisis, which may have slowed operations in the last months of 2017 and have effects on the forecasts of 2018. According to BBVA Research experts. But even so, the entity projects a general increase in prices of 4.9% thanks to demand.
It is true that from the promoter’s point of view, certain types of financial risk are also being incurred. Getting to buy land that is not yet urbanizable.
But still, the bank has taken good note of the old practices. Developing even departments focused on the promoter credit and coming to take part as a partner.
And if financial institutions are taking precautions, the private investor should not be less. “The investor must analyze in detail the circumstances surrounding each project, studying the evolution of prices and the profile of the demanding client”, says Pedro Soria (Tinsa).
The ‘opportunities’ in the purchase of housing
“There is a way to continue profiting from the purchase of housing, although we are still far from the historical maximums”, says Pedro Soria. ‘The most logical thing would be a moderate increase (3% to 4% in 2018), slowing the increases where it has gone higher and slightly increasing where prices still fall’.
An opinion shared by Luis Corral. Noting that ‘it is convenient to look towards areas that have not yet emerged from the crisis and that can benefit from the overheating of some markets’. Thinking of capitals of the province of Galicia (A Coruña and Pontevedra), Andalusia (Seville), Valencian C (Alicante and Valencia), Castilla y León (Busgos and Valladolid) or Asturias.
Despite the slow recovery of the interior and the north of the peninsula, there are good opportunities in some areas. As BBVA points out, ‘Cantabria has a dynamic market and the Basque Country recovers much better than other neighboring communities‘.
Finally, Constanza Maya points out the type of property in which it is really convenient to invest: properties to be reformed. Given that in new construction and new prime areas, opportunities are few.
