Tinsa report gradual pandemic-induced fall in Spanish property values

The sharpest decrease over the last year has been in the Balearic and Canary islands.

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The leading Spanish property valuation firm Tinsa has published its latest batch of monthly data regarding the market value of housing across the country, reporting that in November 2020 the downward trend sparked by the coronavirus pandemic continued, albeit only gradually in most areas.

Following a long period of slight increases in property values, the 2.2 per cent year-on-year fall observed in November marked the fourth consecutive month in negative territory, although during the month there was actually a minimal rise in the nationwide index of just 0.2 per cent. On the downside, the Tinsa index in Mediterranean coastal areas dropped by 4 per cent in November alone, while in the Balearics and the Canaries the value of housing is reported to have fallen by 5.3 per cent over the last 12 months, but more encouragement can be found in a fall of only 0.7 per cent on the Mediterranean coast since November 2019.

The sharpest 12-monthly fall is reported in the major cities and provincial capitals of Spain at 3.4 per cent, while the decrease has been only 0.1 per cent in the catch-all category of other municipalities. Meanwhile, the national average is now reported to be 34.5 per cent lower than at the peak of the property boom in early 2008, but 14.5 per cent higher than when the subsequent market collapse bottomed out in 2014.

The latest bulletin also contains the monthly market snapshot, in which Tinsa highlight reasons to expect upward or downward movements in the value of homes in Spain, summarizing the following indicators among others and clearly illustrating how almost all of them have been distorted by the pandemic:

– Sales figures: the latest monthly data (for September) show a 0.4 per cent year-on-year decrease and an accumulated fall during 2020 of 21.4 per cent.

– Building licences: the latest monthly data (also for September) show a 3.8 per cent year-on-year increase but a 23.6 per cent decrease over the first nine months of the year.

– Mortgages granted: despite the relatively sluggish sales figures, the latest monthly data (for September) show an 18.4 per cent year-on-year increase and a fall of only 7.6 per cent in comparison with the first nine months of 2019.

– Unemployment: the latest monthly data (for November) show a 20.4 per cent increase during the last 12 months.

– Euribor: the interest rate on which most mortgage repayments in Spain are calculated is currently at -0.481% (the average for the month of November), falling again to a new record low.

The low interest rates currently available on mortgage loans ought, in normal circumstances, to be associated with healthy sales figures and upward pressure on market values caused by widespread demand. But the current circumstances are by no means normal, and the surge in unemployment since the pandemic was first detected in Spain earlier this year has led to far fewer people being prepared to buy a home.

Despite this, though, there are indications that the property market is still fundamentally in good health: for example, the sales figures for September, when restrictions on movement and other Covid protocols were not in force, were similar to those of the same month in 2019. On the other hand, whether that level of activity can be maintained will be impossible to say until Spain enjoys a longer period of normality.

Source: Spain News Today, December 2020

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