A guide to buying and selling property during the coronavirus de-escalation phases on the way to Spain's "new normal".
Many areas of Spain are already looking forward to the third phase of de-escalation after many weeks of confinement at home. This phase starts in many provinces on 8th June and this final stage towards what is known as the 'new normal' will also accelerate the flow of professional activity in many sectors, including real estate.
Although the difficulties in closing transactions and visiting properties in person in recent months have been paralysed, including the housing sector, real estate professionals are optimistic and 55% point to stabilisation and moderate growth in these operations in the coming months, according to the I Barómetro Inmobiliario, "El sentimiento de mercado de los profesionales inmobiliarios" (The market perception of real estate professionals) conducted by UCI and SIRA.
This is also indicated by the CIS (Consumer Confidence Index), carried out in April: 9% of Spanish residents are considering buying a house, especially young people between 25 and 34, along with residents in large municipalities.
Is it a good time to buy a house? What steps can interested buyers take? And what about the sellers? How can transactions be carried out if they are from different provinces? What about applying for a mortgage? What protection measures should be taken into account? UCI, the real estate credit union, has created an express guide for the purchase and sale of homes in the third phase of de-escalation in Spain, based on the advice of the real estate experts present in the special edition of "Inmociónate en Casa". Let's have a look at the most important points:
During the period of confinement, there have been great advances in the digitalisation of the usual processes for the purchase and sale of real estate. 3D plans of properties, tours and visits via virtual videos, tools to recreate the situation of the furniture and the decoration of homes and even live virtual tours between the buyer and the real estate agent allow buyers to be able to search for their dream home at the click of a button and therefore, accelerate a large part of the process of acquiring a property.
The location of the property has always been a factor to be considered when buying. But after these months with reduced mobility, buyers have new priorities and will want to have supermarkets, schools, transport, parks or health centres close by more than ever. All of these factors can be analysed in the first steps of your property search at the click of a button, where you can see the services offered by the different areas of interest on your screen, in order to discard those that are not interesting and refine your search.
It is important to check what year the property was built, as half of the Spanish property stock is over 40 years old. It is also important to analyse the energy efficiency of the property, including the energy rating, which ranges from type A (more efficient) to G (less efficient), which translated into the buyer's pocket, will mean either savings and comfort or expenditure and less comfort. The thermal insulation, the amount of natural light or the ventilation system are basic variables to measure it. Whether or not the home meets these characteristics or not, will allow the future buyer to assess the need for renovation and home improvements.
Receipts and invoices
Before purchasing a property it is essential to ensure that the property is up to date with the payment of all services, such as electricity and water or community fees.
Behind a sale and purchase operation there are always administrative and bureaucratic procedures that must be fulfilled before and after the signature. Trying to prepare them in advance, during the initial phases of de-escalation will also help to shorten the process of buying a property, which is usually around two months. In addition, digital signatures are now incorporated in many of these operations, which will also make it possible to be more agile in procedures and sign regardless of your place of residence.
Do your accounts
Banks and financial institutions continue to offer the opportunity to make online and telephone enquiries to apply for a mortgage. In the first instance, to avoid unnecessary risks, you can start the process online and then complete it in person. It is also possible to make a preliminary calculation for guidance purposes using online mortgage simulators. In any case, it is still advisable to have 20% of the deposit for the purchase of the property and to take into account that the interest rates range from 1.50% for variable rates to 2.90% for fixed rates. However, expert advice is key to making the best decision, such as the personalised consultations offered by UCI. Currently, financial conditions are optimal in variable, mixed or fixed rate mortgages. However, given the possible upward pressure on interest rates, fixed or mixed long-term rates are emerging as the best alternative for those who want to ensure a fixed payment.
This is one of the key points in real estate purchase and sale operations and one of the aspects that has most paralysed the sector in recent months. From phase 1, visits to properties are permitted, provided that they are in the same province as the current residence of the future buyer. Although visits are essential to process these operations, the technological tools help all parties to make an important filter to visit only when it is strictly necessary and the purchase decision is quite advanced. After the end of the de-escalation, appointments can also be concentrated outside the province of residence. When visiting, limited groups of people are recommended; preferably a maximum of three: the real estate agent and a maximum of two in the role of buyer, if possible without children. In addition, protection and hygiene guidelines should also be obeyed: the use of gloves, masks and hand sanitising gel for all participants, maintain a safety distance of 1.5-2 meters and avoid the transit in common areas of the property as much as possible, such as lifts or stairs. Likewise, after each visit, the real estate agents must ventilate and disinfect the properties for the next viewing.
The fact that we have all had to spend a lot more time at home in recent months has led many Spaniards to analyse factors in their homes that they perhaps previously didn't consider priorities, such as natural light, the existence of open spaces and exteriors, such as terraces, gardens or balconies, and the actual size of the property. These changing priorities have lead to a large percentage wanting to change their home in the near future and will therefore increase demand. However, José Manuel Fernández, deputy director general of UCI, points out that "the search for these new factors may not be long-term trends, unless companies decide in the long-term to invest more in teleworking, but if this is not a temporary situation, then there could be increased interest in housing in the outskirts or far from large urban centres, as living close to the workplace will no longer be a priority".
The employment situation of buyers in the medium to long term will be key to taking the step of buying and studying the viability of mortgage loans. Although, it is true that some sellers could also put on offers in the real estate market with significant price drops in emergency situations caused by the need for liquidity.
Trend towards moderation and lower prices
2019 closed with a 4% year-on-year increase in the price of housing. On the contrary, according to data from the 'I Barometer Real Estate' released by UCI and SIRA, half of the professionals in the sector point to a stabilisation or moderate decline in property prices in 2020 because of the pandemic.