#: Real estate pessimism or optimism 😉
All indicators confirm the recovery of the property market in Barcelona. What are the threats of this new cycle?
Banks are dishing out cash left, right and centre, construction firms are rushed off their feet and people are buying flats by the dozen, is that right? Well, perhaps not quite to that extent, but we can certainly confirm that optimism is in the air in the Barcelona real estate sector. This shift in the cycle is being driven by several factors: greater bank liquidity, several consecutive quarters of growth in house prices, and a general backdrop of positive macroeconomic indicators.
In the residential sector, we can distinguish between two main categories: new-build properties, which encompass the construction and refurbishment of buildings; and the second-hand market (which is the one we know best at Monapart). The latter accounts for approximately 92% of all property sales in Barcelona, compared with a modest 8% for new-build homes, although this imbalance is expected to gradually narrow over the coming years.
A good flat at market price is sells fast, very very very fast.
What has to happen for flat prices in Barcelona not to go through the roof again?
As Joan Pla was saying, the chairman of BUC (Barcelona Urban Cluster), the day you accompanied me on the broadcast of El Matí a Ràdio 4, It is imperative that supply and demand are balanced in the housing market. In this regard, strong local and international demand in Barcelona is clearly outstripping the current supply of existing housing. We estate agents know this very well: a good flat at market price sells quickly, very, very, very quickly. And the curious thing is that on the day I'm writing this article, there are 13,268 second-hand homes and 95 new-build developments advertised on Idealista.
How is it possible that with an offer of this magnitude we cannot satisfy such high demand?
In my opinion, the problem does not lie in the “quantity” of the supply, but in its “quality”. In the current housing market, demand is increasingly demanding and there are still people who try to sell run-down or simply poor-quality properties at the price of a good property. Consequently: poor-quality homes that will never sell are helping to drive up the prices of good homes even further, since buyers can easily compare them as they are advertised in the same media. To sort out this mess, we can only appeal to the common sense of the parties involved: that buyers keep their heads; that vendors and their advisors (agents like me) are aware of the reality of the product; and that banks and their surveyors don't lose the plot again and finance properties above their real value (I'm sick of seeing surreal valuations).
In a nutshell:
We have high demand and low quality supply (although, I repeat, there are heaps of flats on the market). Flats needing renovation are being put on the market at the price of renovated flats, dark flats are being advertised at the price of bright flats, we're seeing fifth floors without lifts at the price of fifth floors with lifts... Fishing metaphor: pangasius is being sold at the price of sole. And granted, it's all fish, but well, you know what I mean... When this happens, the owners of the sole push the price of sole up even higher, because they know theirs is better.
If estate agents, banks (and their surveyors) and buyers don't show a bit of common sense, prices are going to spiral out of control and we'll suffer all over again.
All things considered, I’m not sure whether to go for the #optiminmo or the #pesiminmo… ;(
