Optimism continues regarding home buying, although the upward trend in prices is a concern

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Spaniards, at this year-end and beginning, continue to be optimistic about buying a home, although they are concerned about the continuous upward trend in prices, according to the Solvia Real Estate Confidence Index (ICIS). In this sense, the survey result is consistent with Solvia's view that the market has more growth potential in transactions than in prices, especially in those regions where population growth, disposable income, and unemployment figures are below the national average.

The ICIS is a Solvia barometer that quantifies Spaniards' perceptions and expectations when it comes to acquiring a home. In its latest sampling from late November, it is clear that Spanish consumer confidence continues in a favorable zone thanks to an improved outlook on the situation two years out, standing at 109 points out of 200. This figure is in line with that recorded in April (108 points) and slightly below that marked a year ago, when the ICIS reached its highest level (116 points), after standing at 112 points in the two previous waves.

Thus, producing and marketing housing at prices in line with demand will continue to be a fundamental challenge in the real estate sector.

In Catalonia, the confidence index remains at 101 points, although the two-year evolution places it at 113, always below the Spanish average, although it also remains in favorable territory.

Of the two indicators that make up the index, the one that reflects whether the current situation is favorable for buying a home moderates, almost reaching the neutral position of 100 points, mainly due to the feeling that prices continue to escalate. In addition, the perception persists that labor and savings conditions do not accompany these price increases (and is behind the moderation of this indicator), although compared to April 2018, the view on this personal situation does improve.

However, while the current situation indicator moderates, the expectations indicator, which measures the view on the two-year evolution, rises five points from April, to 118 points out of 100.

This improvement in optimism for the future is driven by the growing belief that prices will contain or moderate their upward trend. On a personal level, citizens also foresee better labor, savings, and credit access conditions, which contributes to the improvement of expectations.

The level of confidence of Spaniards remains above 100 points in all Spanish regions. In Catalonia, the confidence index stands at 101 points, although the two-year evolution places it at 113, always below the Spanish average, although it also remains in favorable territory.

The areas with a level above the Spanish average are Andalusia and the Canary Islands, where the barometer stands at 114 points. Also in the North zone, the ICIS is above average, with 111 points.

RENT PRICES ALSO ON THE RISE

In the rental sector, the trend of those who believe that prices will continue to rise is still dominant, although it declines compared to the April 2018 survey.

It is relevant that the percentage of respondents in Madrid who perceive that rental prices will continue to rise, while still being the majority, moderates compared to the previous wave.

THE ICIS, A REFERENCE BAROMETER THAT HAS ANALYZED CONSUMER CONFIDENCE IN THE REAL ESTATE MARKET SINCE 2016

The Real Estate Confidence Index is a barometer developed by Solvia in collaboration with the Kantar TNS research institute since November 2016. It collects the perception of Spaniards about the housing purchase market with a range of 0 to 200 points, with 100 being the neutral position, 0-100 being negative, and 100-200 being a favorable opinion.

The ICIS is composed of two indicators that evaluate both the general and personal perspective regarding home purchases, in addition to a current situation indicator and a two-year expectations indicator. The Confidence Index is calculated as the arithmetic mean of each of these variables (current situation index + 2-year indicator/2).

Solvia has been developing this index since November 2016, with two annual waves in November and April, which allows obtaining comparable data over six-month periods.

This index has been prepared with a sample of 1,204 interviews conducted from October 15 to 19, 2018, with individuals between 25 and 60 years old. The respondents are residents of Peninsular Spain, the Balearic Islands, and the Canary Islands. The sample has representative quotas by sex, age, zone, habitat, and socioeconomic index at a total level and at the level of each zone by sex, age, autonomous community, and habitat. The sample error at a total level is +/-2.87% for a reliability of 95.5%.

ABOUT SOLVIA

Solvia is a leading firm in real estate services in Spain, with a portfolio of 141,000 units of assets under management, whose value exceeds 30,000 million euros. It is an industrial company, with a diversified client portfolio and a staff of nearly 800 people, which constantly invests and researches and applies innovation to all its areas of activity, developing its own technology for years.

Currently, it is not only a servicer but a real estate company with a presence in the retail and investment market that offers services to individuals, companies, and investors. Solvia has a proven capacity for managing all types of real estate assets, both residential and tertiary and unique.

The company stands out for its consulting work and operates in all market segments. It offers services ranging from the commercialization of properties for purchase, sale, or rent, to consulting and valuation for investors, as well as asset management or credit portfolio management.

In addition, it has enormous capillarity thanks to its network of Solvia Stores, a total of 60 street-level points distributed throughout Spanish geography, from which it serves its clients, offering them comprehensive real estate solutions with professional and personalized attention.

Solvia has been developing its own technology for years and recently, in its eagerness to contribute to transparency in the real estate market, it has launched the geolocation tool Solvia Location Intelligence, which offers residential market data at the census section level, and the valuation tool Solvia Price Index, which establishes the price of a home based on big data and machine learning. Both are openly available on its website free of charge and provide professional information that helps to make the best decision when buying, selling or renting a home.