The pandemic is exacerbating the fall in house prices
A study by Tecnocasa notes that the arrival of viruses caused a drop in amounts of more than 4% in 2020, twice as much as before the health crisis. It rains on wet. A year ago, the real estate group Tecnocasa and Pompeu Fabra University presented a report that was one of the first in Spain to detect a fall in house prices. Specifically, he noted that in the second half of 2019 houses were worth 2.1% less than in the same period of 2018, so the authors of the study predicted a change in market trend. 12 months later, and with an unexpected health crisis through, this price drop is estimated at 4.4%.
"The situation is affected by the pandemic, but it has its origin and cause from the previous year," said Lázaro Cubero, director of analysis of the Tecnocasa Group, "two factors are added: the end of a growth cycle the pandemic situation ". The study does not draw a catastrophic situation in the following sense: while in the first half of 2020 (the arrival of the pandemic), prices fell by 4.95% year-on-year, in the second half they do a 4.4%. This means that there is "some support", said José García Montalvo, professor of Economics at Pompeu Fabra University and coordinator of the report. That is, although the fall in prices is marked, it is not accelerating over the months. However, it should be borne in mind that the second half of the year is compared to a period in which houses were already cheaper and that, as noted by those responsible for the study, the data presented this Tuesday are chaining year and half consecutive downward. 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 various 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 "an advanced indicator". However, none of the experts has dared to predict how much the houses will go down this year or until when they will, although they have agreed that in 2021 it is unlikely that the amounts will go up again. In other words, the floors will continue to fall. Also the evolution of big cities is considered an advance on what can happen elsewhere. And here the news is not good. The falls have become widespread. Barcelona, where homes fell by 6.8% in the second half of last year, is the one that shows the sharpest falls. It is followed by Seville (-6.1%) and, already below the national average, Valencia (-4%) and Madrid (-3.75%). Zaragoza is also down (-2%), while Málaga is the only city with more than half a million residents where the amounts resisted, as they rose by 0.6% compared to the second half of 2019. In In absolute terms, the study places the average price per square meter at 2,205 euros, with Barcelona (2,890 euros) and Madrid (2,517 euros) well above this mark. Back in the most populous capitals, Malaga is in third place (1,610 euros), followed by Zaragoza (1,326 euros), Valencia (1,280 euros) and Seville (1,270 euros). Rents are also down The average amount of mortgages brokered by Tecnocasa (the report is based on a volume of 4,150 loans in 2020) has not fallen as much as the sale of houses.
The 115,611 euros average mortgage at the end of 2020 is only 1.4% less than in the same period last year. The same study provides data for the most plausible explanation: the percentage of homes that are bought on loan is increasing (79% of first homes) and the profile of purchases made as an investment is falling back (a 19 %, when in 2017 they were more than 27%). "The investor has withdrawn from the market," said García Montalvo, "but he is waiting to see how far these falls will go that will make the investment more profitable." An example is that the percentage of such purchases in cities such as Madrid, Barcelona and Malaga has fallen sharply, while Valencia is the only one that maintains a percentage of around 30% for its most affordable prices. A curious fact provided by the report is that, for the first time, the average rate in the first year of mortgage came out more expensive to those who had a variable interest rate than a fixed one.
Tecnocasa places the first at 2.05% and the second at 1.88%. This, explained the group's CEO, Paolo Boarini, does not mean that variable loans are more expensive than fixed loans. In the first year, entities to offset some initial expenses usually apply a differential to variable interest. "It's usually one more point than after. From the second year, it wouldn't apply anymore," Boarini noted. It is, therefore, an effect of lowering the fixed interest rate, the margin with respect to the variable has been narrowing. Finally, the report also presents some data on rents, based on more than 6,530 contracts brokered by Tecnocasa. The authors have highlighted that in the last year the cheapest leases have grown significantly. Those with monthly incomes of between 600 euros and 800 euros have gone from representing 42% of the total in 2019 to 52% in 2020. Meanwhile, rents above this threshold of 800 euros have fallen since accounting for just over half of the market at 36.4%. For Cubero, "that means rents are moving downward."
Source: El País