New Home Permits Increase As Spanish Market Heads To Recovery
News Posted On: 07 November 2014
The number of applications or building permits to construct new homes in Spain rose by 3.3% in the first eight months of 2014, compared to the same period in 2013. The Ministry of Development issued data showing that it had received a total of 24,696 requests, the second consecutive improvement noted since the continuous declined precipitated by the 2008 crash which drove Spanish house prices through the floor.
Much of the appreciation is isolated in the third quarter of 2014 – what appears to be a gradual increase over several months when you first look at the figures is really a sharp upswing in Q3. In August alone, just over 2,000 requests were received for building permits, a 30% increase over the same month in 2013. If the current rate of applications to build new homes continues, the year could end with more than 37,000 permits applied for, slightly above 2013’s total but still below 2012’s.
Spanish newspaper El Mundo reported that up until August, 15,005 applications were received for permits for home reforms or restoration, a slight drop compared to the same period in 2013. This seems to indicate the switch from repair and improvement to purchase that would accompany a traditional recovery. Requests for permits for home extensions, the traditional alternative to buying a bigger house, fell sharply, by 20.4%.
Spain’s economy is (just) in growth, with second-quarter figures showing the country inching into the black at 0.5-0.6% growth. In addition, home sales are rising. In the 12 months to June 2014, sales rose 12.2% on the previous year, and the second quarter saw sales rise by 12.1% year on year.
The Spanish housing market is also seeing price recovery, as well as more building and increased sales. Standard & Poor released data earlier this year estimating that the price of housing in Spain will rise by 2% in 2016. Citing interest from foreign investors and Spain’s own improving economy, S&P says it expects solid growth but warns that ‘in the long term, the number of non-sold flats will dampen the perspectives of a sustained recovery of housing prices.’
From the opposite corner, Moody’s warned that Spain’s improving economy, in their view, won’t boost house prices, at least initially. The company warned that oversupply, including the ‘non-sold flats’ that give S&P cause for concern, as well as high unemployment and a dwindling population, meant that ‘the declining house price trend will continue over at least the next year,’ according to analysts Luis Mozoz and Antonio Tena.
The co-founder of Spain’s largest property website, Idealista, spoke out during an interview this September, saying, ‘despite many proclaiming the end of price drops and some embarrassing newspaper headlines heralding soon-to-be-seen increases, it’s still too early to speak of a generalized recovery.’
One black mark against Spain’s housing market is that much of the interest in it is coming from overseas buyers, with about 16% of sales in the second quarter of the year going to foreign purchasers.
Written by Les Calvert of www.property-abroad.com
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