Javier García del Río (pictured), the head of Solvia, one of the biggest real estate servicers in the market, recently talked to the Spanish daily El Mundo about house prices in 2016.
“We don’t expect nor want an aggressive rise in house prices,” said the boss of Solvia, in a recent interview. Solvia was set up by Sabadell Bank, but now manages real estate portfolios for others like the Sareb ‘Bad Bank’. Solvia is the fourth biggest servicer in the market, with €28.6 billion of assets under management in 2015.
“At Solvia were are convinced that the growth trend for the real estate sector will be maintained in 2016.” However, prices will only rise gradually he forecasts, saying that “we don’t count on an aggressive rise in prices in any scenario. We don’t expect it or want it.”
House prices are not the most important factor at this stage in the cycle, as far as García del Río is concerned. “At this time, the fundamental thing is for the market to offer buyers products they want,” he says. Growth in demand is more important, in his opinion, than prices.
That said, perceptions are important, and expectations that prices will not fall any further are good for demand. “The percentage of people who think that prices are going to rise is starting to increase, and therefore so are transactions.”
As others have done, Garcia del Rio points out that the market today is driven by local factors. “One has to keep in mind that the market is characterised by geographical disparity, and that every area evolves according to multiple variables: prices, transactions, stocks, etc.” He notes that some of the biggest prices differentials occur in the same neighbourhoods, which “makes it clear that different micro markets behave in different ways.”
New development is also on the up, from Garcia del Rio’s vantage point. and not only in Barcelona and Madrid. “Big cities like Valencia and Seville, or densely-populated tourist areas in the Valencian Region, Andalusia, Galicia and Murcia are also showing dynamic land markets (with developers and investment funds the main players).”
He points out that Spain now has a glut of new homes in some areas, whilst shortages are starting to appear in others. For example, “in the Madrid region, and the Basque Country, the stock of new homes is already below 1.5% of the overall housing stock,” explains García del Río.