The reactivation of the real estate market in Spain that begun in 2015 continues, creating a perfect moment to invest in property. According to the forecast made by the Real Estate institute of business practices, the average price of the real estate transactions in Spain could reach 145.000 euros, which would mean a 7,5% raise compared to 2015.
Also, for the first time since 2010, following a 14% raise, the forecast says that the number of transactions will overcome 400.000 operations. The economic context has improved considerably on the past trimester.
- Increased employment stability that generates more solvency and arouses interest in property and at the same time encourages the investor to request mortgages to the banks.
- Higher number of mortgage credit: Until June the number of credits granted to property acquisition has risen 24,2% compared to last year.
- Negative Euribor. For seven months in a row, entities have been aiming at fixed rate mortgages, as at least in short term it offers more guarantee than the variable mortgages based on Euribor. The share of variable mortgages has reduced to79%. Also the European central bank has cheapened the credits offering low interest on the variable mortgages.
This situation differs a lot from the one from a few years ago when the credits attached to the Euribor hoarded the 98% of the total. If the investors trust that their incomes will increase the best option is the variable option while for those who don’t need long terms to pay and have stable incomes, the best option is the fixed one.
Besides this situation the financial entities are studying improvements for these conditions. This context increases the distribution of loans for this year in a 10,5%, according to the IPE’s forecast.
In an environment with low profitability, the savers have started looking for alternatives where property represents a huge attractive. Jose Antonio Perez, director of the Real State Cathedra of the IPE considers that “There is a money transfer from the financial market to the real estate market.” and adds that the Brexit is also related since “the British savers with money are investing in Spain because of the depreciation of the pounds”
Is it a good time to invest in property?
Current circumstances confirm this question; it is a good time to invest in the real estate market for one essential reason: The great rising potential of the prices after the huge fall from the last crisis.
Besides the prices, the increase in the rent is strong, and it is attractive to take advantage from that as the profitability is very interesting, especially at the big cities. In August for example in Barcelona, renting an apartment was 14,8% more expensive than last year. Experts recommend to invest in well located cities, such as Madrid or Barcelona, especially fixer uppers, that after a renovation easily can be rented out at good prices. In this way one can receive an even higher profitability from the initial investment; something that can be done easily with Housers, without compromising a large amount of money.
Properties average gross annual yield is situated in 10,9% per year according to the Bank of Spain, residential property is up 6,3% annual in the first trimester while the additional performance that renting offers is of 4,6% over the price of the property, which means, the profitability of the property is six times higher than the performance of the sovereign debt in 10 years, and offers higher safety than the stockmarkets.
Besides these increases there are also significant changes, such as the average time that a property is on sale, which is reducing according to the consultant Knight Frank “Before, the average sales average ranges between 10 and 12 months, and now it rounds between 3-6 months.”