What can we expect from the real estate market in 2019? | Final Part |

We based ourselves on statistics from the BBVA Bank Research department and obtained information from the main Spanish real estate portals such as Fotocasa, those figures show mainly that there is a big gap in prices between big cities such as Madrid, Barcelona, Valencia etc compared with a more moderate behaviour of the rest of the country and with the red numbers still registered in some regions.

However taken all the information there is no doubt that the market is getting slowly back on its feet in 2018.

Purchase and Sale in 2018 and 2019

In the year that is about to end, good figures have also been obtained in terms of sales transactions, although most of them have been on used homes.

According to the latest data of the Spanish Real Estate Registry Statistics, corresponding to the third quarter of 2018, during this period 133,295 purchases were made. In an inter-annual calculation, 508,402 operations were registered, 420.699 of them on second hand houses. Thus, in the absence of knowing the final figures for end of the year, (they are normally published one month after the end of the year) everything points to an end figure of about 600,000 real estate transactions.

But what will happen next year? According to the national director of Residential and Land CBRE, the forecast is that in 2019, most probably we will reach an amount between 625,000 and 645,000 units sold.

The data proposed by Population coincide with those provided by the director of Estudios from Tinsa, which forecasts an annual increase in these operations of more than 5%, reaching more than 625,000 transactions.

Sociedad de Tasación, stresses that the market for second-hand housing continues to have an important weight, mainly in the segments of the population that are considering a first home, due to the dysfunctionality among the new housing prices and salaries that allow access to it.

At this point, Guillermo Llibre, CEO of Housell, argues that one of the main reasons why the sale of homes has experienced an unstoppable escalation in 2018, "has to do with the rise in the price of lets. This, the demand has also changed: buyers of all ages have gone on to see the option to rent as an unnecessary expense, and bet on the purchase as the best possible long-term investment. " and I tend to agree with him hundred percent.

Projects on the pipeline

From figures obtained from our College of Architects, they point out that there are around 100,000 new housing being lodged for building license, which is about 25% more than in 2016.

It is an important increase by all means, similar to the previous year. However, the levels here are still relatively low, and the housing presented to the local authorities to obtain building license for 2018 will scarcely account for 13% of those projects presented between 2004 and 2006.

Undoubtedly, one of the most important challenges for next year will be to achieve, at least, a certain balance between supply and demand. The market consensus is that Spain needs between 120,000 and 140,000 new homes a year, these demand figures are much higher than the 50,000 homes that are finishing each year and are presented for building licenses: I foresee that little by little the real estate sector will be approaching that point of equilibrium with respect to the production of new housing.

The demand is still solvent and stable, which is why they will continue to produce releases in an important way. However, I admit that there are places where the finalist soil is scarce for example, Madrid and where new construction will grow in the short term, but we must also worry about obtaining new land and generate land with planning permission on which to build the following years.

Land with planning permission

That will be, as has happened in previous years, the main headache of the building sector: the lack of land. Above all, especially in key areas such as Madrid, Barcelona, Andalusia or the Basque Country, all of them with high demand. A problem that, adds to the slowness of the procedures of the local authorities to obtain planning permission, which must be solved with negotiation and understanding by all parties.

I think that the local authorities begin to be aware of the need to put new land in the pipe line to increase the supply of new building work. However, I hope that we all involved one way or another in the building industry have learned the lesson, that we cannot go back to create another bubble as in 2007.