• The impact of the slowdown and regulatory insecurity has intensified in recent months and experts predict more cooling symptoms for the next exercise
• The effects of Brexit

Moderation and containment. That will be the tonic that, according to analysts and experts, will follow next year the real estate market, at the moment in good health. Always bearing in mind that the direction of the wind can change as uncertainties such as the arrival of Brexit and the trade war between the two giants, China and the United States, are resolved. And, in an internal code, the sector is aware of the formation of the new government and the impact that Podemos’s presence could have on the regulatory framework of the activity. In any case, it will, as always, the economic situation that will set the course of this market. In fact, signs have already been detected this year that real estate activity has slowed, as has the economy. It grows less and at a slower rate.
This is what several recent reports reveal. Research by Caixabank Research acknowledges the slowdown in the real estate sector in 2019 and predicts “a moderate growth scenario” by 2020. Various indicators show symptoms of exhaustion. For example, fewer houses are sold. With inE data, home sales fell by 3.2% from January to September. Although in that period it is worth taking into account the effects of the entry into force, in June, of the new mortgage law. “Summer was very difficult months. All transactions have been postponed because of the market’s need to adapt to the new law,” says Ferran Font, director of studies at the real estate portal pisos.com. That has had another consequential effect: mortgage contracts fell by 31.6%. Even so, the sales volume is high, above 500,000 units.
With inE data, home sales fell by 3.2% from January to September.

Although in that period it is worth taking into account the effects of the entry into force, in June, of the new mortgage law. “Summer was very difficult months. All transactions have been postponed because of the market’s need to adapt to the new law,” says Ferran Font, director of studies at the real estate portal pisos.com. That has had another consequential effect: mortgage contracts fell by 31.6%. Even so, the sales volume is high, above 500,000 units.
With inE data, home sales fell by 3.2% from January to September
Also the recent Statistical Yearbook of the Spanish Real Estate Market 2019, by Acuña&Associates, accredits this trend. According to this document, in 2018 house sales increased by 7%, compared to 17% the previous year. And in 2019 it could end with just a 1% rise.
The analysis states that, while the residential real estate sector has increased its activity this year, it does not do so in the same way in all geographical areas, and presents “great mismatches between supply, demand and stock, with the consequent uncertainty in price expansion.” There is the paradox that there are areas where there is still a strong stock of unsold homes from the time of the crisis and others where it is necessary to build new construction because there is no stock and a great demand. It is in those places that new promotions will be seen. In this group are Madrid, Barcelona, Alicante, Malaga, Seville and Balearic Islands, which for now concentrate half the activity on new construction. Pisos.com that the first-hand residential supply will continue to increase, because, for the first time since 2008, this year will exceed 120,000 visas for the construction of new construction.

This same thesis is also defended by Caixabank’s report, which also addresses how the price of housing has been rebounding in the last five years, although it is still 22% lower than the maximum reached before the crisis. This recovery has occurred at different speeds, creating a widening price gap between cities. In 2019 buying a home in Barcelona and Madrid costs twice as much as the national average, while in 2014 it was only 1.6 times more expensive.
An analysis by Tinsa Digital reflects that reality. In this year, the Forecast calculation, which analyses 147 municipalities in the country with a population of more than 50,000, estimates that in 54% of them house prices will rise less than 2%, in another 27% of populations will have a moderate increase 2% to 5% and 19% more than 5%. In the latter group are Madrid and Barcelona, where more housing has increased in recent years, 49% and 53%, respectively, since the crisis, compared to the national average revaluation that has been 17%.
The climb moderates
The report further refines, explains Rafael Gil, director of the Tinsa Studies Service: “The municipalities on the outskirts of Madrid (Pozuelo de Alarcón, Parla, Leganés…) He says – and Barcelona (Badalona, Santa Coloma, Granollers, Manresa…) will still have room for growth above 5%, something that could also happen in certain markets on the Mediterranean coast, such as Fuengirola, Benalmadena, Torremolinos, Motril or Orihuela”. Apart from these one-off growth, in general, “we anticipate stability of all indicators of supply, demand and prices during the year 2020, after a year this 2019, of widespread cooling”, concludes Rafael Gil.
Therefore, the forecast is that prices will continue to rise but less and more slowly. “The upward trend in the price of housing is maintained, but at a slower pace. While these numbers have not given up moderation, and have only occasionally exceeded 7% in the period of higher growth, the 4.7% year-on-year increase in the third quarter of this year means the lowest rise since the end of 2016. Something that affects the second hand and also the new work,” says Font. In addition, containment is confirmed in Madrid and Catalonia, which have historically led the price hike. Now they have given way to Andalusia and the Balearic Islands, which are up 6% year-on-year”.
The forecasts that he released pisos.com estimate that the price of housing for sale will increase between 2% and 4% for next year, while the price of rental housing will record an increase of between 4% and 6%.
Precisely, something that creates some uncertainty is the evolution that rental prices will follow, a new way of accessing housing that has had a great take-off in the last decade in a country where traditionally and mostly the preference was for housing on property. In fact, we have 82% of homes owned, the rest for rent, while European countries the leased home park is between 50 and 60%.
Madrid and Barcelona are the most complicated squares. The pressure of tourism, the arrival of international companies looking for prime areas and bringing foreign professionals to the center of these megacities, the lack of finalist land and a low supply of rental homes have boosted prices in those cities. To get an idea, comments Ramón Riera, president of Fiabci Spain, of how leases have evolved in recent years, “in 2013, 70% of the offer of some people was below a thousand euros. Today only one in four homes is below this price.”

They are very attractive cities for everything, for international investors, for students, to work… As Riera says, “the technological moment we live in is generating a great mobility of people. From Spaniards who come to big cities, from foreigners… In recent years 750,000 foreigners have been established to live in Spain. And in the absence of supply, prices have tightened.”
In their view, they will stabilise throughout 2020, they are already doing so in some places this year, “because the market no longer accepts those prices,” he says. Currently families spend almost 50% of their rent to pay rent, when it is advisable to be 30%. But in some areas of Madrid Barcelona, Malaga and Valencia will continue to grow by around 5%. In others the price will go down.”
Regulate rent
Apart from the market following its own rules of play, no one escapes the fact that the future government being forged in Moncloa could tackle a rental regulation with certain price limitations, something that is not highly accepted in the sector. “We need quick action,” urges Riera, who advocates establishing tax incentives for landlords and tenants, based on their rent, as a way of stimulating supply.
Real estate agents also cry out to regular. “Rents have lost control and require regulation. It is important to do something in Madrid and Barcelona and it is also necessary to agree it with market players. Only foreigners can pay rents in the centre of these cities,” says Gerard Duelo, President of the General Council of Coapis (Official Colleges of Property Agents). Of course, next year, we have to be attentive to what happens in this sector which already accounts for 14% of our GDP.

The effects of Brexit

“Brexit is a melon to open that we don’t know how it will come out.” This explains Ramón Riera of the uncertainty caused by the UK disconnection from the EU in the real estate market. The British are the largest foreign investors in housing in our country. According to solvia data, this year, of the 24,289 transactions carried out by resident foreigners, 14% belonged to Englishmen, a community that continues to grow in our country. “Whether it’s buying a house, investing, or living here,” said Ferran Font, the British prefer the Mediterranean coast and the islands. “They have brought together more than 40% of the sales on the Costa del Sol, especially in Alicante,” says Solvia’s report. Whatever happens, the chairman of the property agents, Gerard Duelo, believes that “it will not be a determining factor in setting the course for the real estate sector”.

ABC