October 30, 2020

Bankinter aims for the slowdown in housing prices – La Provincia


Bankinter has pointed out thatthehousing pricesare entering stagnation phase, but believes that Spain is not facing the end of the residential cycle. Specifically,Bankinter expects prices to moderate up to 5.5% this yearand does not expect significant growth for 2020 and 2021.

This has been stated in a report on thereal estatepublished by its analysis department, which also highlights that there is some overvaluation of housing in Spain, around 8.8% in relation to wages.

In fact, consider thatprices will continue to be supported by imbalancesbetween supply and demand, the generation of employment, the "comfortable" financing conditions, the sharp increase in rents, "which place the rental effort in line with the purchase of housing," or the profitability of housing for rent, which "is still attractive in today's environment".

Since minimums reached in 2014, thehousing pricesfree in Spainaccumulates a revaluation of 36.2%, still 12.3% below the cycle peak.

Regarding the offer, Bankinter has pointed out that it is increasing sharply and that it estimates that in 2019 the 120,000 homes started will be reached, which should be completed in 2021, "at that time being with the middle part of the estimated demand range" .

In addition, he has still remembered thatthere is a 'stock' of unsold housing459,876 units or 4.6 years of structural demand. Along these lines, he pointed out that he does not foresee that he will compete with the new offer in the coming years.

Bankinter analysis

Bankinter's analysis also highlights that thecontraction phase of yieldshas ended, so he believes that asset valuations will depend on the evolution of income. Thus, in offices it expects revenues to increase at rates of 3% per year, and has pointed out that in shopping centers there are risks of rents and valuations down due to the rise of electronic commerce.

He also stressed thatthe logistic assets are those that present a major attraction, "with great demand and capacity to increase incomes".

By last,Bankinter has stressed that it is "more attractive" to invest in the sector through listed real estate, especially for its greater profitability and liquidity and lower transaction costs and lower risk as well.
Its recommendation in Spain is to invest in Merlin Properties, because it has "a well-diversified and balanced portfolio of assets to obtain attractive returns with a moderate risk profile."

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