Housing starts the year registering a drop in sales of 5.9%, according to data provided by the General Council of Notaries and experts point out that this decline could increase in the coming months due to the uncertainty generated by the coronavirus.
Specifically, during the month of January 39,366 operations were closed. This year-on-year decrease is driven by the second-hand market, where merchantings have fallen by 7.8%. On the contrary, new housing continues its good evolution, with an increase in operations of 13%.
The high demand that exists for new construction products, compared to a reduced supply in the areas with the highest demand, is pushing activity in this sector. However, the report reflects that the buyer of this product begins to be limited in terms of prices, since in January the square meter for new construction stood at 2,274 euros, which means that they remain practically flat compared to a year ago, with a slight increase of 0.2%.
For its part, second-hand homes They sold for an average of 1,607 euros, which represents an increase of 2.1%. According to the Notaries, the average price of the transacted house thus stands at 1,474 euros.
The drop in sales in the month of January follows the path started at the end of 2019, when the first decline in operations in the last five years was recorded. To the slowdown in the sector itself, another factor of uncertainty is now added, such as the coronavirus crisis, which could slow down operations in the coming months.
The virus will impact real estate
The most immediate effect of the real estate market is a drop in the sale of homes, especially second-hand, which could be offset by the attractiveness of the sector for safe-haven investment.
According to a first estimate by the real estate consultancy Colliers Internacional, if the stock market declines continue, the sudden disappearance of the wealth effect would bring down the sale of second-hand flats by at least 20% this year, to which would be added a decrease in home acquisitions by foreigners (Chinese, Italians, Germans and British) of between 25% and 30%.
In statements to Efe, its CEO, Mikel Echavarren, assures that, although they have “the fly behind the ear”, for the moment there is no impact on institutional investment operations, nor in the hotel sector, nor in the office sector, neither in the residential of the third age, nor in the build to rent, as it is known in the slang to the houses that are built to rent.
“The investment market has already raised that money to invest and it has a series of times to do it and, on the other hand, the alternative of institutional investors to real estate investment is the stock market and we already see what is happening in the park, “explains Echavarren, who does forecast an immediate impact on the residential market.
The sale of new construction will remain in 100,000 operations this year
Of the more than 500,000 homes that were sold last year in Spain, some 100,000 were new construction, the same volume that the consultancy plans for 2020 and predicts that it will be maintained, since they are operations that have been carried out in the last two years by private contract.
In the remaining 400,000, he calculates a drop from 15% to 20% “for being optimistic,” says Echevarren, “unless this recovers after the summer or there is some vaccine.”
“If you have 30,000, 40,000 or 50,000 euros saved to buy a house and you have it invested in shares, what you decide is not to buy it until the stock market recovers”, he argues, and remembers that “if that is maintained for a long time, the second-hand home prices would start to drop. ”