According to a research conducted by the Spanish bank BBVA, the growth of home sales in December elevated transactions in 2014 to 364,00, 19% more than the year before. On the other hand, home prices ended 2014 with the first trimester growth since the start of the crisis at the same time as the start of homes closing the year in the black. That includes the Salamanca district in Madrid property market
All things considered, perspectives for economic growth for the year in progress and favorable financing conditions will provide a new sales increase in 2015 that will be accompanied by moderate pricing growth and a new increase in building activities.
The data from December elevates housing sales in 2014 to 364,000
Home sales in December last year reached 43,901 operations, which makes up a year-to-year growth of 27.7%, the biggest in the last eight months. With this fact, it is concluded that it was a year in which demand had been recovering month after month to close out the records with 364,000 homes sold, 19.1% more than in 2013 and the first solid growth since the start of the crisis.
Sales growth in December has reflected a new impulse toward credit granting for new operations of home acquisition, which grew 47.1% year-to-year, the largest increase of the year. With this in mind, this granting of credit, which is found at relatively low levels, grew during 2014 by 24%. It is the first increase since 2007 and highlights a greater dynamism of the mortgage market.
The price of the home grew in the last trimester of 2014
One consequence of the solid evolution of demand is reflected in the behavior of the price of the home. According to the Building Ministry, during the fourth quarter, homes rose in value by 0.5% triannually, once the trimester’s own seasonal nature was corrected (CVEC). With this in mind, the price of the home ended the year at 1,463.10 euros/sq. m, a similar level to that of the end of 2013. Per type, while second-hand homes experienced an advance of 0.7% regarding the preceding trimester, the new home remained practically the same.
The price of the home keeps showing an elevated geographic heterogeneity, although on this occasion the autonomous communities were those that recorded more of a price increase: while in the third trimester of 2014, only three regions had home prices rise in terms of the trimesters; in the last trimester of the year, homes were worth more in eleven regions. Among all of them, the price increases that stood out were in the Valencian Community and the Madrid Community, 1.7% and 1.4% respectively. In addition, there are various regions that have left behind their minimum prices: The Balearic Islands and Cantabria have accumulated an increase of around 4.0% since reaching rock bottom in the fourth trimester of 2013, and in the Canary Islands, the prices have seen three trimesters of growth, which means an increase of 2.2% since their lowest point. On the other hand, the largest price fall was in Castille-La Mancha and Castille and Leon.
Building activity moves forward in 2014 due to visa adjustments in the month of December
During the month of December, the number of homes being built started to adjust again, like the granting of 9.6% of visas for new residency reflects, in comparison with those signed in November. Due to the adjustments of the last trimester of the year, the level of visas ended the year with an increase of 1.7% in comparison with 2013, which breaks seven consecutive years of drops and turns 2014 into the turning point for building activity. As such, according to the National Triannual Account, investments in homes started to grow again in the second half of the year after 28 consecutive trimesters of drops.
In fact, the rest of the associated variables for sales continue reflecting the better tone of activity. On one hand, records of participants in Social Security of the building sector started to grow again in the last part of 2014, in the first month of the current year at the time that unemployment in the sector was reduced by more than average. On the other hand, the consumption of cement also increased in the last part of last year, staying at a standstill in the first month of 2015. Keeping all this in mind, the expectations of companies in the residential construction sector in the first month of the current year continued to move forward because of the tendency toward recuperation which ended 2014.
Positive Perspectives for 2015
The recently concluded 2014 could be cataloged as the year that the recuperation of the housing sector started. The return of economic growth, the recuperation of the labor market with the creation of some 425,000 jobs in an era of financial stability and of relatively favorable financing conditions encouraged recuperation of consumer confidence, and, with it, the growth of housing sales. As a consequence, the price of the home registered the first triannual growth since the start of the crisis, almost reaching stability and, for the first time since the start of the crisis, residency visas for new buildings ended the year with a positive balance.
A tendency toward recuperation that will be reinforced during 2015. So far, the prediction of economic growth for the current year has increased to 2.7%. It is hoped that the number of those working grows by about half a million and that the types of interest remain relatively stable in an era of stability. Factors, all of them, that suggest a new increase in housing sales to which prices and building activity will respond with growth.