The economic research bureau Axesor an overview of the situation in the housing sector and concludes that housing demand is needed to recover more falling prices and kept rates low interest. It also discusses the falling prices by province for 2011 and the role of banks, which may facilitate adjustment in the housing market with greater price declines.
1 .- Housing demand: it is a key to the recovery of the sector. Their behavior will depend on access to credit, changes in unemployment, changes in the prices of housing and demographic component. Furthermore, as asexor, the problems that exist in the English labor market raises the uncertainty of employed persons who choose to delay buying a home.
Axesor proposed reasons more optimistic as the expected drop in prices and low interest rates to boost demand. The first reason should occur in the coming quarters and in the second, the rates are at historic lows so that any future rise (short-term is discarded) penalize the housing market.
At the moment, nor the severe liquidity problems of the financial system and unemployment can look with optimism to the revival of demand for housing and the output of the housing crisis, it said.
2 .- The housing prices, low interest rates interest rates, easy credit, high returns in the sector, expectations of further price increases were an explosive cocktail that led to the formation of the housing bubble. From its peak in the first quarter of 2008 and according to the Ministry of Housing, the price has accumulated a 12.02% nominal drop late in the first half of 2010.
Axesor remember that prices have fallen slightly in relation to the accessibility indicator measured from the ability to pay long-term English families. And there are ratios such as house prices and household income indicating the need for further falls between 12 and 15% more than half, to lose 6.8 years of gross family income needed to purchase a house at a figure around 4-5 years.
The firm notes that price adjustments will occur depending on the different markets and / or provinces because in each there is a stock or a separate claim. By 2011 between the English provinces is estimated a further fall in the price are Malaga and Toledo, with decreases of 31% and 27%, respectively, from their own peak. Other provinces exposed to strong price declines of between 20% and 30% are Alicante, Valencia, Huelva, Tenerife, Zaragoza, Madrid, Las Palmas, Segovia, Granada, Almería, Cádiz, Guadalajara, Castellón, Baleares, Huesca, Murcia.
Axesor highlighted in its report "full extent of the crisis in the macro-construction" that the greatest negative impact on prices is in tourist communities, especially in Valencia, Andalusia, Murcia and the two archipelagos.
autonomous communities where prices will fall next year by 10% and 20% from their peak are Castilla y León, the Basque Country, La Rioja, Navarra and Catalonia.
wielding asexor reasons to expect more price falls are
- 2010
- reset will not allow house prices in Spain, to the large surplus of unsold housing
- With the recovery of the German and French economies, probably a rise in interest rates (expectations are linked to the Euribor), which further sink the English property sector.
- contraction of English GDP and the unemployment rate still high (low demand for home)
- liquidity needs of banks continue to prevent a revival of credit to businesses and families.
- The elimination of tax incentives can have a negative effect, as demonstrated in the U.S. housing market or recently in Spain to tax incentives to purchase cars.
3 .- The role of banking sector recovery : if the funding that comes to families and businesses remains low the chances of reviving the housing demand is reduced and the risk of corporate credit related to construction and real estate increases.
Real estate assets on the balance sheet of financial institutions for more than 24 months require 30% coverage. These new provisions introduce a healthy dose of realism and help the adjustment occurring in the housing market, with more price drops over 2011. The problem is that these real estate assets, including developments in progress will require increased investment to make them habitable floors.
Finally, Axesor create increasingly clear that "the significant drop in land prices that new housing will have a cheaper cost and therefore more affordable prices. In this context, the housing market will have to lower their prices. The longer the adjustment takes place, the harder it will be the consolidation of the sector's recovery.
Source: Axesor and Idealistic
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