A survey of the public attending the recent Madrid International Property Show (SIMA) reveals some interesting new trends in the Spanish housing market.
Attendees of SIMA tend to be well informed and ready to buy, with financing in place. A detailed study of visitor profiles carried out by Planner – the organisers of SIMA – in collaboration with the Sociedad de Tasacion valuations company revealed that “yet again that the main SIMA visitor profile is of someone coming with the intention of buying in the short term,” explains Eloy Bohúa, the managing director of Planner. “ Compared to previous years they have a bigger budget and foresee fewer difficulties in financing their purchase”.
An analysis of budgets finds that, between the survey carried out at the last show and this one, the percentage of people looking for property at the cheapest end of the scale (up to €150,000) has dropped from 36.5 per cent of the total to 22.1 per cent. At the other end, those looking for property priced at over €300,000 have gone from 12.8 per cent to 21.6 per cent. Meanwhile, 29 per cent are searching for property between €150,000 and €210,000, and 28.3 per cent between €210,000 and €300,000.
The main finding of this budget analysis is that the public attending SIMA this year have bigger budgets than those attending last year. However, it is also true that many of those surveyed are trading up, so they need to sell their current home to help finance the purchase, leaving plenty of uncertainty in the process.
Perceptions of access to mortgage financing has also improved dramatically in a year. At the previous show in 2014, 67 per cent of those surveyed thought they were very or quite likely to get a mortgage approved. This year that percentage goes up to 80.2 per cent. Last year 18.3 per cent said getting a mortgage was an obstacle to buying, this year only 9.1 per cent say that. Clearly, the figures showing a large increase in mortgage lending are feeding through into buyer perceptions.
Job insecurity is another obstacle to home purchase surveyed by SIMA, falling from 8.9 per cent last year to 6.3 per cent now, so the stronger economy and employment growth figures are leaving buyers more confident.
EXPECTATIONS OF LOWER HOUSE PRICES
Expectations of lower house prices have also narrowed, going from 6.8 per cent in 2014 saying house prices would continue falling, to 4.6 per cent this year. Expectation of lower prices are no longer one of the main reasons for delaying a purchase.
The majority may no longer expect house prices to decline further, but that doesn’t mean they think Spanish property prices are cheap. Just over 50 per cent say that house prices are still the main obstacle to purchase, down from 65 per cent last year. So, despite the huge price adjustment, home purchase is still out of reach for many people.
Regarding the survey’s findings, the general manager of ST, Juan Fernández-Aceytuno says that “an improvement in the economic situation, the stabilisation of prices, and the increase in mortgage approvals” has led to “an increase in consumer confidence and appeal among those who are currently planning to buy a home”. “It’s precisely these factors,” he continues, “that has renewed interest in the sector and are reflected in the survey”.
On the supply side, the show also illustrated how the Spanish property sector is evolving after years dominated by bankruptcies and bank repossessions. Developers were once again at the forefront of project marketing, after years with almost no role to play.40 per cent of the property on offer at the show was on the market for the first time, in response to a reactivation in demand.