In hindsight, we are all Juan Belmonte. The truth is that no one could imagine – no matter how much we assumed the longing for a balcony, for a window, for four flowerpots, for a piece of garden – the escalation that was going to live the real estate business as soon as the new normal stick out the paw The period immediately after the end of the confinement saw “a lot of buyers flocking to the Conil and Chiclana thinking of second homes”, comments Ramon Rodriguezowner of Spain. In 2021, Cádiz capital had already exceeded the number of sales compared to 2019. Ehe current year even started with figures above the first quarter of 2021and the proportion of growth continues to be very high in the province, “although it must be taken into account –he points out– that We came from a very low situation.”
Certain areas of the province, such as sotogrande, act as centers of attraction for foreign clients, especially English‘Brexit means.’ The majority buyer profile, however, is national: around 80 percent of the total, they calculate in Southern communities. “Most of them, although they are not from Cádiz, are clients who they are no strangers to Cadiz and, either they have romantic or family ties, or they have been on vacation frequently in the past. Many, thinking about their retirement”, adds Rodriguez.
“Since the pandemic, practically in all the localities of the province there has been an increase in demand –coincide Begoña Gómez, manager of Comunidades del Sur–. Let’s say this scenario has made people who were procrastinating on their purchase decided to do it now, both first and second homes”.
“The pandemic has moved many things in terms of housing, among other reasons, because the feeling when you have a small apartment is different from the one you experience when you have to being routinely in a small flat”continues Ramón Rodríguez. Immersion in the telematics that the forced drowning of our lives with the coronavirus has also had its translation in the real estate universe, normalizing the practice of teach flats via video conferencing, as it becomes established as a preselection. “No one buys a house by watching it on video, but 50-60% of people do the filter”Rodriguez says.
Since 2020, in short, the trend in the real estate market has continued to be on the rise, although the constant is not linear: “Just released ukrainian War, It took a significant downturn, but then the phone began to ring more insistently, even with the prudence implied by the rise in interest rates,” he adds.
A) Yes, the operations of buying and selling flats in the province of Cádiz stabilized during the month of Aprilthe last data computed by the INE, after a very strong start to the year to the point of reaching the highest figures since 2007, before the financial crisis that sank the real estate sector in half the world.
April closed in the province with 1,271 purchase and sale operations. They were 200 less than in March, when 1,496 operations were reached, and also below the months of January and February. It is also the worst figure since April 2021, when 1,244 contracts were signed. In any case, if we limit ourselves to the month of April, this year’s data is the best since 2009, since in 2008 1,400 operations were carried out.
Despite this decrease compared to the movement of the first quarterthe strong trend of second-hand housing transactions continues. There were 977, compared to 294 new flats. The best data was achieved in March, with 1,134 used homes and 362 new ones.
20% of buyers, estimated in the Southern Communities, are foreigners
Mortgages, of course, have continued to rise far and wide. In March 2022, a total of 1,786 mortgage firms were established in the province, 500 more than in February of the same year, which saw a total of 1,268 signatures. The total is also higher than March of last year, when 1,392 mortgages were signed. And, of course, what is higher than 2021 is the economic amount, for a average amount of 178,728, compared to the 142,909 that showed the same month of the previous year and the 145,715 euros, which is the national average, according to INE data. Even so, the average has dropped compared to 183,136 euros this February.
For Ramón Rodríguez, however, current prices cannot be considered disproportionate. Among other things, because the scenario is different from what was experienced in the bubble. Prior to the explosion, interest rates changed from high to low, and mortgages extended their concession from 15 or 20 to 30 or 40 years: “People looked at what they paid for a mortgage per month, not what it cost. Now the problem we may have is the lack of land, but it is not affordable”.
“People are smart and see that interest rates are going to go higher and that, despite everything, now may be a good time to buy –continues–. Although it is important to note that vExceptionally low rate enims. The rise in inflation was inevitable and foreseeable, because we have seen the amount of money that we have put in place to get out of the pandemic without there having been an increase in wealth to justify it. We have to adapt to all that and, the investments that we have to make, better now than tomorrow”.
In the same line is Álvaro Pedreño, Hispania manager, according to which the market evolution It will depend on whether the interest rate rise is very high in a very short space of time or whether we are going to experience a moderate rise. For the specialist, too it is important to contextualizesince “we came from negative interests,” he explains. After this initial rise, I expect a moderation, a trend that can be assumed by buyers. This, together with a moderation also in sales prices, will mean that the Cadiz real estate market will continue to enjoy good health in the coming years”.
“Although it is true that fixed-rate mortgages have risen one percentage point in the last four months, going from 1-1.5% to 2-2.5%, a 30-year fixed mortgage signed at 2% or even 3% interest, is still historically very low -keep going-. If we also take into account that we are with the inflation around 8%the cost of financing is still cheaper”.
In the opinion of Begoña Gómez, the current increase in prices is “slight” and is mainly due “to the fact that right now there is a greater demand for housing supply, but this market is very fluctuating, and in a few months we may not be talking about the same thing”. He does not believe that the rises in interest rates that we are experiencing are going to stop the housing market. A mechanism that only stops, as happened in the 2008 crisis, “when the bank stops financing,” he says. That the interest rate is rising can slow down the market somewhat but, in no case, whoever has decided to buy a home is going to stop doing so because the financing is more expensive”. On the other hand, he adds, “Housing has always been a refuge investment in the face of increases in inflation”, so it is to be expected that the market will continue to move quite a bit.
In the province, there were 1,271 sales operations during the month of April
“There is an increase in second home buyers, who rightly see a good investment for their savings in the purchase of a second residence in the province of Cádiz, one of the most attractive tourist areas in Spain – Álvaro Pedreño underlines. After the last world events experienced (pandemic, Ukraine War), and its economic effects such as inflation, It has been shown that investment in housing is the one that has had the best and safest profitability, compared to other investment alternatives.
Specialists also highlight the different scenarios that the province houses, with cases like Jerez, where you can see “two cities in one, with prices rising in certain areas and others where they are still very low, where you find houses for 30,000 euros: flats that, if they gave you the land, it would cost you 50,000 to make them –continues the person in charge of Hispania–. In other locations, such as Medina, has risen very little, although the farms in the historic center have…”
Sales have increased in the case of Cádiz capital with a different profile: that of people who aspire to improve their home. “We have returned to the little trains, which have not been produced for a long time –says Ramón Rodríguez–. Someone who buys a small flat, and the one from that flat buys another one a little bigger, and the one from that one a little bigger buys a bigger one…” The capital is also characterized by having a “majority second-hand market hand, so house prices are less exposed than in areas where new-build developments are suffering from a significant increase in construction costs”, indicates Álvaro Pedreño.
Production costs. Another interesting variable in the field, from the hand of the energy shortage and the rise in the cost of raw materials. in January, the National Confederation of Construction (CNC) communicated the stoppage of works for an amount of 230 million euros. “Many promotions are stopped for this reason, because the numbers do not come out or, for them to come out, they would have to sell one-bedroom apartments for 180,000 euros,” says Ramón Rodríguez. Right now, the situation has to stabilize. Some promoters with planned projects have decided stop for now, or even put the land up for sale because they saw that they were not going to give way to the promotion in the short term. Another question -develops-, are the big promoters, like Abu, that has millionaire endorsements”. When those juicy promotions that we hear about go on sale and evaporate in 24 hours, it is not that they are resolved in a day: it is that they were already agreed with their investors.
The promoters live a moment of prudence before the increase in costs
From the Provincial Federation of Construction Business Groups (FAEC),Jorge Fernandez-Portillo points out, however, that the general climate is prudence in the face of uncertainty, but far from paralyzation: “In times like the ones we live in, pandemic, energy crisis, inflation… promoters have learned the lesson and above all, greater financial muscle and strength than in 2008, so they make decisions more calmly, he explains. In this way, you wait a bit before entering the commercial or pre-commercial phase.” Even so, he acknowledges that the current energy scenario and the tension in raw materials mean that the sector is carrying out “enormous efforts to maintain the balance with the agreed price”. Developer and builder close at the stipulated price, but “when the ton of steel skyrockets, there is a problem, because that extra cost cannot be passed on to the final price,” he says. The difficulty arises when the margin is narrowed for one part as well as for the other, that can lead to a work being stopped”.
“The price per square meter not only goes up because a lot of housing is bought.to –adds Fernández-Portillo–, but also before the shortage of supply, if it sells a lot or if I have a shortage of stock”. And, in the real estate market, the stock is the land. “Since the wickerwork has not been put in place so that more land can be developed urbanistically, we are finding that there is a shortage of it,” he continues. Given this situation, the square meter is going to become more expensive the more pressing the demand and the times”.
Although playing Casandra is something that nobody asks for these days, Fernández-Portillo ventures that a few months from now, “it is conceivable that there may be a contraction in demand before the possibility of carrying out projects that are not realistic. We are waiting and in a period of uncertainty, but with the peace of mind of knowing that the sector is strong to face the situations that may arise”.
