The sale of homes has already returned to prepandemia levels: Home sales return prepandemic levels demand recover - demand recovers but prices continue to resist falling and there will be no changes in the second half of the year.

After a 2020 in which the real estate market marked lows of more than a decade in the volume of home sales while prices continued to rise without experiencing the impact of the pandemic, as foreseen by the consensus of the sector, in 2021 the trend has changed in terms of the number of transactions, with a recovery in demand, while prices continue to resist falling.

This is, broadly speaking, the diagnosis of the main experts and real estate portals consulted to know their opinion regarding the behavior of the sale of housing during the first half of the year and their forecasts for the second half, although with important nuances between them regarding the recovery of the market and the evolution of its prices.

Home sales return prepandemic levels demand recover

With regard to the beginning of 2021, several indices in the sector indicate that prices, despite differences between areas, have slowed their upward trajectory during the first half of the year. Thus, Fotocasa estimates that, in the second quarter have put an end to 4 years of uninterrupted rises in the price of housing, encrypting its fall by 0.7% compared to the previous quarter, although highlighting that they remain 0.5% above the value of 12 months ago.

Meanwhile, the statistics quarterly of finished home of the society of appraisal Tinsa corresponding to the period between April and June showed an increase of 2% from the second quarter of 2020, highlighting that the market maintains the positive trend that began the year, and that the largest increases were recorded in both archipelagos, Galicia and the Basque Country.

However, the Report of the Housing Market of Tecnocasa and the University Pompeu Fabra reflects that the price of the property —in this case used— in Spain has declined in the first half of the year 1.43% compared to the same period of the previous year, accumulating 4 consecutive semesters in negative, as shown in the graph above, although tempering the flashbacks of 4.4% recorded in the second half of 2020 due to the revival of the demand.

Home sales return prepandemic levels demand recover

Why this variety of figures?

"Since 2017, the price of housing has failed to stabilize in no time in Spain, being common the ups and downs from quarter to quarter," says Guillermo Llibre, CEO of Housell, stressing that the trend in prices has been upward between 2018 and the arrival of the pandemic, when the market was building up her sixth year of rising prices.

"Therefore, we believe that in Spain the real estate market is cyclical and has an approximate duration of 7 years," says Llibre, who explains that the national real estate barometer prepared by Housell reveals that the price of housing has risen 12.54% in the last semester compared to the same months of the previous year. This implies an increase of more than 2,000 euros, up to an average price of 225,405 euros.

"Surprisingly for everyone, and for me the first, prices have not fallen during 2020, what we all expected," recognizes Iñaki Unsain, president of the Spanish Association of Real Estate Personal Shopper (AEPSI), who attributes it to the fact that homeowners understood that this crisis was conjunctural and temporary and that he points out that in 2021 there has not been that adjustment in prices, which he considers to be stable.

Home sales return prepandemic levels demand recover

"Do not occur falls at the state level since the summer of last year, in fact at the beginning of the pandemic, the trend started to go down," stresses Ferran Font, director of Studies Pisos.com. "After the summer of 2020, the price began to recover, and still do, although in a fairly moderate at the national level," he adds. And he points out that the climbs are more prominent in Madrid.

For her part, María Matos, director of Studies at Fotocasa, highlights that homeowners are reluctant to lower prices despite the pandemic for 4 reasons: "The great latent demand to change houses, the high profitability as a financial product, the attractive financing conditions of banks when granting mortgages and the change in the housing preferences of individuals, since we now value our housing more".

Matos points out that prices accumulate 28 quarters of year-on-year growth and attributes the maintenance of this trend to the interest in changing to a larger house with exit to the outside that has generated the confinement. "We believe that in this first half of the year the market has demonstrated its great dynamism and its great resilience after the impact of the pandemic," he adds.

Home sales return prepandemic levels demand recover

For its part, Lazarus Cubero, director of Analysis of Tecnocasa, emphasizes that the prices are in keeping with the light falls, and aims to observe the behavior in each city, given that in cities such as Malaga, Cordoba or Alcalá de Henares (Madrid) have been recorded setbacks of between 5% and 6%, while in Madrid or Barcelona, there have been declines more moderate, and in Seville, Valencia and Zaragoza have been registered increments above the 1%.

Regarding the volume of sales, Paolo Boarini, CEO of Tecnocasa Spain, says that during the first half of the year there has been a better performance than expected, with 57% more purchase operations than during the previous year. In addition, Cubero points out that the second-hand market has rebounded by 20% year-on-year according to the Ministry of Transport, registering levels similar to those of 2019.

"The market is already in pre-coronavirus figures. Although in March there was an upturn and month-on-month in April there is a slight fall, it is true that the figures for April, which exceed 42,000 housing transmissions in Spain, place it as the best month of April since 2008", says Ferran Font, noting that the advance is 65% compared to 2020 and 3% compared to 2 years ago.

Home sales return prepandemic levels demand recover

"We have been 2 months, March and April, that are already showing figures prior to the coronavirus and we will have to see how they evolve and if this positive trend is settling", explains the director of Studies of Pisos.com. And it points out that new-build housing is working comparatively higher than second-hand housing, increasing more than 10% compared to 2019, compared to 1% of used housing.

Iñaki Unsain attributes this dynamism to the recovery during 2021 of the operations that were paralyzed by the pandemic, stating that the decline during 2020 was uneven and affected the areas with the greatest foreign presence, especially in coastal localities, in the Mediterranean arc and in the islands, which compensated for the figures of the rest of the territories.

Meanwhile, Housell's real estate barometer shows that in the first half of 2021 the same homes were sold as in the last of 2020, with more than 200,000 purchases. "On the other hand, sales times have also increased by 62.5%, according to this study. The fact of not being able to visit a home makes, many times, people think twice before making the acquisition", explains its CEO, Guillermo Llibre.

Home sales return prepandemic levels demand recover

Regarding the real estate landscape during the second half, Llibre considers that the market has begun to recover, although not completely. "It seems that the market has started to recover a little, but we believe that it will continue to be a somewhat irregular trend in the second half, and that the situation is still far from stabilizing," he adds. And he predicts that " 2021 will not be the year of real estate recovery."

For his part, Paolo Boarini says that the market is in a stable scenario and rules out a strong fall in prices since it did not occur during the pandemic and bets on a moderate increase. For his part, José García-Montalvo, professor of Economics at Pompeu Fabra University, believes that macroeconomic uncertainty will stop the large increases in both price and operations with buyers in a waiting period.

"As for the number of trades, those that fell in 2020 will recover, this year we will have a volume of trades similar to that of 2019, that is, to 450,000 units," calculates Iñaki Unsain, while expecting changes in terms of prices. "I still believe that the magnitude of the consequences that the pandemic has had for a lot of people and for companies is very important and, therefore, I think that there will be a very irregular situation," he says.

Home sales return prepandemic levels demand recover

"We are going to live a rare market, in which you can find great opportunities in those people who have need, with important price drops of 10% or 15%, but on average there will not be a drop by the mixture of those who can endure and those who can not endure, plus upward price corrections, will make the average remain stable, I do not anticipate significant decreases this year or rises," says the president of AEPSI.

Meanwhile, Maria Matos points to a deeper change. "Our Fotocasa Real Estate Index already detected at the end of 2019 the first falls in the price of housing, for the first time after 38 months of increases. Therefore, it would come within the normality that already completed a year after the impact of COVID-19, we began a change of cycle," he says, noting that prices grow at their lowest rate in the last 7 years.

Home sales return prepandemic levels demand recover