New-build housing comes onto the scene in a big way
The real estate sector is clearly recovering, sales of second-hand homes are on the rise and recently there has been a call for new developments. We analyse why.
According to data from the National Statistical InstituteThe increase in the number of building permits for the construction of new homes in the Official Associations of Quantity Surveyors and Technical Architects has been consolidated with increases since 2013. This increase, although in some periods it is very slight as can be seen in the graph, coincides with the recovery in sales of second-hand housing, which suggests that this momentum of new construction is going to continue for a long time.
Indeed, the developers of new-build flats have not wanted to be left behind and have returned to the fray, ready to take their share of the cake, making substantial changes in both their format and their profile compared to 2007. The large developers that have survived the severe economic crisis of recent years are maintaining their market share; the newly created developers are very powerful and have highly professionalised structures; then there are the cooperatives and development companies created by the banks to diversify their business; and finally, there are the small developers, who have not yet found their moment to enter the new market situation with clarity.
Monapart Alicante, and the other 6 Monapart agencies currently operating throughout Spain, we are real estate agencies specialising in second-hand housing. That is why, at this point, we ask ourselves: How does this boost in the supply of new-build flats affect the sale of second-hand homes?
In the areas premium In the main Spanish cities, the cranes and posters announcing new developments of new construction are once again on display, and in this scenario, it is inevitable that second-hand housing in the same radius of action, which until now had been doing very well, will be affected. In this scenario, it is inevitable that second-hand housing in the same radius of action, which until now has been doing very well, will be affected. They have competition!
Let us now look at the The main arguments of developers in favour of the sale of newly built flats as opposed to second-hand flats:
* Price. Today, the costs for a developer are significantly lower than in 2007. Land, construction costs and technical resources have become cheaper, which makes it possible to adjust the selling prices of new-build flats downwards without losing profit margins. In short, a new-build flat built in 2016 can be cheaper than one built in 2007. Can you imagine a new car being cheaper than one that has been used for a few years? Paradoxical.
* Payment facilities. If we buy an off-plan property and we are not in a hurry, the developer will probably provide us with the financed purchase until the keys are handed over, and this is something that the private individual will not do. Let's bear in mind that to buy a €200,000 property, any buyer who needs financing will need 33-34% of its cash value (20% that the bank will not finance, 10% of taxes and 3-4% of mortgage, notary and registry fees). In other words, if you do not have around 66,000-68,000 € you will hardly be able to buy a second-hand property.
To buy a €200,000 second-hand house you need €66,000-68,000 in cash.
* Higher quality and greater energy efficiency. The entry into force of the Technical Building Code (Ley 38/1999 de 5 de noviembre, de Ordenación de la Edificación) during these years of crisis, has subjected the construction of new buildings to more demanding regulations for the sake of better quality in construction and a considerable improvement in the energy efficiency of dwellings.
* Brand new. Offering a brand new property in a brand new building is a very attractive argument that often makes doubts about the quality of the finishes, the state of the building, the outstanding payments, the cost of a possible renovation... vanish like smoke.
The prices of new-build homes will set the trends in house sales prices in their respective areas.
In short: All these arguments in favour of new-build homes will mean that it is precisely their prices that will set the trends in the selling price of housing in a given area. And issues such as the possible reforms to be made, or the improvements made or even the time remaining to cover the mortgage will become second order arguments... Monaparters, let's welcome the new construction, bursting onto the real estate scene with force!
* If you are a developer, see how we can help you in our new construction consultancy service to get the most out of your promotions.
