Rains, it pours. A year ago, the real estate group Tecnocasa and the Pompeu Fabra University presented a report that was among the first in Spain to detect a drop in the price of homes . Specifically, it pointed out that in the second half of 2019, houses were worth 2.1% less than in the same period of 2018, so the study authors predicted a change in the trend in the market.
12 months later, and with an unexpected health crisis through, this drop in prices is estimated at 4.4%. “The situation is affected by the pandemic, but it has its origin and cause from the previous year”, has valued Lázaro Cubero, director of Analysis of the Tecnocasa Group, “two factors are added: the end of a growth cycle and the pandemic situation” .
The study does not draw a catastrophic situation in the following sense: while in the first half of 2020 (that of the arrival of the pandemic), prices fell 4.95% year-on-year, in the second half they did so by 4.4 %.
This means that there is “a certain support”, said José García Montalvo, professor of Economics at Pompeu Fabra University and coordinator of the report. In other words, although the fall in prices is pronounced, it is not accelerating over the months.
However, it must be taken into account that the second semester of the year is compared to a period in which houses were already cheaper and that, as those responsible for the study have pointed out, the data presented this Tuesday supposes to chain a year and a half consecutive to the low.
García Montalvo considers that the figures provided by Tecnocasa, which are based on almost 10,000 home sales brokered last year, predict the path that the market will follow for several reasons. The first is that they reflect real prices, that is, the amount at which a purchase is closed; and the second is that they are based on second-hand housing, which in addition to being the majority is considered “a leading indicator”.
However, none of the experts has dared to predict how much the houses will fall this year or how long they will do so, although they have agreed that it will be difficult for the amounts to rise again in 2021. In other words, the floors are going to keep falling.
The evolution of large cities is also considered a preview of what can happenin other places. And there the news is not good. The falls have become widespread. Barcelona, where houses fell 6.8% in the second half of last year, is the one that shows the sharpest falls.
They are followed by Seville (-6.1%) and, already below the national average fall, Valencia (-4%) and Madrid (-3.75%). Zaragoza also fell (-2%), while Malaga is the only city with more than half a million residents where the amounts held up, as they rose 0.6% compared to the second half of 2019.
In absolute terms, the study it places the average price per square meter at 2,205 euros, with Barcelona (2,890 euros) and Madrid (2,517 euros) well above that mark. Again when considering the most populated capitals, Malaga is in third position (1,610 euros), followed by Zaragoza (1,326 euros), Valencia (1.
The average amount of mortgages brokered by Tecnocasa (the report is based on a volume of 4,150 loans in 2020) has not decreased as much as the sale of houses. The 115,611 euros of average mortgage at the end of 2020 represents only 1.4% less than in the same period of the previous year.
The study itself provides data for the most plausible explanation: the percentage of houses that are bought by loan is increasing (79% of the first houses) and the profile of purchases made as investment is falling (19%, when in 2017 they were more than 27%).
“The investor has withdrawn from the market”, García Montalvo has estimated, “but he is waiting to see how far these falls will go that make the investment more profitable”. An example is that the percentage of this type of shopping in cities like Madrid,
A curious fact that the report provides is that, for the first time, the average rate in the first year of the mortgage was more expensive for those who had a variable interest than a fixed one. Tecnocasa places the first at 2.05% and the second at 1.88%.
This, explained the CEO of the group, Paolo Boarini, does not mean that variable loans are more expensive than fixed ones. In the first year, entities to offset some initial expenses usually apply a differential to variable interest. “Usually it is one point more than later.
From the second year on, it would no longer apply ”, Boarini pointed out. It is, therefore, an effect of the cheaper fixed interest , whose margin with respect to the variable has been narrowing.
Finally, the report also presents some data related to rentals, based on more than 6,530 contracts brokered by Tecnocasa. The authors have highlighted that the cheapest leases have grown significantly in the last year.
Those with monthly rents of between 600 euros and 800 euros have gone from representing 42% of the total in 2019 to 52% in 2020. Meanwhile, rents above that threshold of 800 euros have been retracted from representing slightly more than the half of the market to 36.4%. For Cubero, “this means that rents are moving down.”