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Thursday, July 27th, 2017

BBVA Research 2017: The real estate market bounces back by 10% (and not only in the residential sector)

The prediction is that the increase in the price of real estate will be around 3 per cent during 2017, closing the year at 1,570 euros per m2


Real estate market

VALENCIA. The property sales will reach 500,000 transactions in 2017, a 10% increase with respect to the previous year, with an upward revision of three percentage points in relation to the last quarter. These are the study forecasts of the ”Spanish Real Estate Outlook”, that BBVA Research prepare annually.

Nevertheless, it is expected that these increases do not exclusively effect the residential market. It is worth highlighting that the non-residential and commercial sector meant 13,567 sales in the first quarter, which indicates a growth of 19.5% year over year. According to BBVA Research 2017, the office transactions increase by 24%, whereas in warehouses and premises, they rise by 10%.

More essential data that advanced in the study is that the prices will rise around 3% on average annually, closing the year at 1,570 euros per square meter. This means that there will be similarities to 2004, taking the prices from the Spanish Ministry of Pubic Works as a reference.

The bank considers, between the factors that will commend buying and selling, that they include the increase in job creation, more optimism in households about future economic development, low interest rates and growing foreign demand, that for the moment has found a solution curtailed by the operations caused by Brexit.

Geographical heterogeneity

In annual cumulative terms, until March 2017 it shows an increase above the national average in Asturias, Baleares, Cantabria, Castilla-La Mancha, Cataluña, Extremadura and Madrid. The worst records situated in La Rioja, where the annual cumulative sales fell to 3.2% in the first quarter and in Murcia, with a 2.9% increase.

The market is growing in all demand segments, fundamentally driven by the sales of the “main dwelling”, which has grown by 20.8%, in advance of the ascent in the “foreign demand”, by 15.3%, plus the “second residences”, by 13.1%.

Foreign buyers

Although the deceleration persists for property purchases from British citizens (the data is 7.4 points lower compared to 2016), they continue being the largest consumers amongst the foreigners that acquire properties in Spain. The uncertainty in light of Brexit and the depreciation of the pound sterling seems to have taken its toll on the real estate market.

In comparison, other nationalities gain weight in 2017. The French represent 9.6% of the foreigners that buy property in Spain, (1.8 more than last year). Other nationalities that continue growing is Italy, which represents 6.1% of the total purchases. The weight of the Germans grew 0.7 points, until 7.7%, and finally the Belgians at 0.8% until 6.9%.

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