02 Dec Why the last quarter of the year is a good time to buy a home, in six keys
The need for bank branches to meet their annual objectives and the stabilization of the real estate market are two of the main factors pointed out by experts.
The real estate market shows clear signs of slowing. At the end of the first half of 2019, the signing of mortgages and the purchase and sale of homes recorded year-on-year falls of 16.2% and 9%, respectively, according to the INE and the General Council of Notaries. In July alone, notaries signed 20.8% fewer transactions than in the same period a year ago. However, experts point out that there are good reasons to buy a home in the last quarter of the year. These are the keys.
Jams in the middle of the year. This year there is also an extraordinary circumstance. The new real estate credit law, which came into force in mid-June, has caused some delay in operations during the third quarter, requiring a study of the debtor’s solvency by banks much more exhaustive than in the past and a new system of communication with notaries whose implementation, not being ready, was postponed until July 31. “Because of this delay, many entities have clicked on mortgage products in the third quarter and have their objectives not met, so we can find very competitive rates before the end of the year,” says the general manager of the brokerage company Your Mortgage Solution, Ricardo Gulias. Coinciding with this analysis, Colombelli predicts “a hot fall in the mortgage sector. In any case, Gulias also warns that house prices could rise, due to the effect of a dynamization of transactions after the previous delay.
The Euribor is on your side. The index to which practically all variable mortgages in Spain refer continues to be in negative territory and its hypothetical rise towards values above zero is neither there nor expected, according to the consensus of the experts. This translates not only into a reduction in the cost of old variable mortgage loans and especially favourable conditions for those that are constituted now, but also into a price war unleashed by the banks to attract more and more clients to the fixed mortgage, a product that guarantees entities a greater profitability. “Half of the banks have lowered their conditions over these months and this is also going to be the tone of the last quarter,” says Colombelli. “In the case of fixed mortgages, we are in historical records with very low rates,” he says. The result? As a study by the Casaktua real estate portal shows, 64% of future buyers are clear that they will bet on fixed interest.
The market is normalising. “In addition to a certain stabilisation of prices in large cities such as Madrid and Barcelona, there is also a drop in smaller towns. It is a situation that has nothing to do with the one we lived at the beginning of the year and even less with the end of 2018”, says Colombelli. Potential buyers know this, so it is increasingly difficult to sell at too high prices and it is a good time to get the best out of the negotiation. “Despite not increasing at the pace we had become accustomed to, there is still a margin of promotions left for housing that we can avoid if we buy soon,” suggests Gulias.
New homes, on the attack. Although second-hand homes are still the engine of the real estate market, new-build homes are opening up and gaining more and more ground. Between January and June, the sale of new homes grew by 7.4%, according to the INE. Casaktua’s report shows that 15% of Spaniards planning to buy a home in the short or medium term are looking for a new building. On the supply side, “there are many housing developments in the market, especially in large cities,” says Colombelli, who adds: “As there is more supply, it is logical to expect prices to fall in the second hand market.
Do the choices favour you? On the role of the political situation that Spain is going to experience in this last quarter, very marked by the 10-N electoral date, the experts are divided. “It will be a period of economic and political uncertainty, which will discourage foreign investors,” says Colombelli. The effect will be a greater opening of the market for the domestic buyer. On the contrary, in Gulias’ opinion, after the November elections the desired stability could finally arrive. “If this is the case, real estate transactions will increase, pushing prices,” he concludes.
Source: El país