After several months of the pandemic, the real estate sector is gradually recovering its activity. This is revealed by official data such as the Real Estate Activity Registry Index (IRAI) of the Association of Registrars, which shows how during the third quarter of 2020 indicators related to property, transactions or mortgages are rising after the contraction that occurred during the confinement, with an IRAI of 103, 6.39 more than that recorded in the previous quarter (96.81).
The outlook is similar to the latest statistics published by the INE, which reflect how the purchase and sale of homes in October stabilised at 37,000 operations, well above the figures for April, May and June, which were no more than 27,300 operations.
Nevertheless, and despite this context of slight improvement, the situation of the property market is still very different from that before the pandemic. Although it is still early to make estimates, everything points to the fact that next year will be decisive for the sector. In particular, the price adjustment has not yet changed significantly despite initial forecasts. The reason is that this indicator tends to lag behind the economic cycle, and it will not be until next year that real trends start to be identified, especially as regards second-hand housing.
This fact, together with other novelties in the sector, such as the increase in technological features and digital services, the transformation of housing needs when looking for a new property, the emergence of teleworking and greater interest in enjoying rural areas, make the first months of 2021 the perfect time to take the plunge and acquire a new property. And to justify this, Solvia’s experts detail the six reasons why adding home buying to the 2021 list of purposes:
Good opportunities to buy in new construction. In the wake of the pandemic, buyers are looking for larger homes, possibly with outdoor areas such as terraces or balconies, with more community amenities such as gardens, swimming pools or recreational areas, or energy-efficient homes. These are attributes that the new homes comply with. Although the prices in this case will not be adjusted too much and will remain stable. Furthermore, taking into account the boom in teleworking, buying a property in peripheral areas, where the cost of these properties is much lower, will allow you to take advantage of the great opportunities presented by this market.
Housing in central locations that are much more affordable. For those who prefer to enjoy central locations and, at the same time, spaciousness, more light, extra rooms for teleworking, and even energy efficiency, there is also the option of buying a second hand property at a good price and carrying out reforms. And the price adjustment will be perceived, especially, in the used house. In fact, the imbalance between the two markets is already apparent. The latest figures from the INE’s Housing Price Index, for the third quarter of 2020, reflect an increase of 0.8% in this type of asset (+7.5% in new construction). However, for the coming year, Solvia’s experts predict an adjustment of around 5% in second-hand housing and the stabilisation of the value of newly built properties.
More digital features for the purchase. Intelligent market analysis tools, alert services, use of filters, good quality photos, videos, mortgage simulators, etc. All these functionalities facilitate and provide greater quality in the search for a home. Moreover, in the case of visual resources, they help to get an initial idea of the property and avoid unnecessary journeys.
The home continues to be a profitable asset for investment. According to the Bank of Spain’s estimates for the third quarter, housing is one of the few assets that offers a significant positive return and that can still be upwardly mobile. Although profitability has fallen as a result of the crisis, now standing at 5.6% compared to 6.8% before the pandemic, it is still an asset for which we can continue to make profits, especially through renting.
Lower mortgage rates.
The low interest rates offered by the banks will remain and will continue to be an incentive for buyers with resources to acquire a new property and take out a mortgage. Even so, the banks continue to maintain their strict conditions when facilitating this type of concession. Even more so in a context of economic uncertainty, when banks have to abide by these requirements more than ever, with the aim of ensuring that the applicant has sufficient economic solvency to make the purchase of a new property and to take out a mortgage.