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It's getting back to normal

The Kingfisher's big mealMuch has been said about the slowdown in the real estate sector and few are the symptoms that have so far evidenced this supposed slowdown. But that was until now. Today there is already an indicator that confirms a clear change in trend: the sale of houses.

Se vende (muy barata) la famosa casa embrujada descubierta ... If in the middle of the 'boom' all the flats were sold long before the first bricks began to be laid, nowadays the houses are not 'laid' as they were then. So much so, that they have even begun to see finished houses with the 'For Sale' sign, something unthinkable just two years ago. Experts agree that the 'turnkey' purchase has only just begun.

“It is not yet a widespread phenomenon, but it is certainly the first real sign that something is changing. The sales periods are getting longer, so that within a year or a year and a half the turnkey product will be much more representative, when in the years of greatest market boom it was non-existent. The logical thing is that 25% of the houses in a development are sold finished and ready to move in, ”says Carlos Smerdou, CEO of Foro Consultores.

Although all the experts consulted agree to point out this phenomenon as the first real sign of the end of the real estate boom, since so far the supposed slowdown is not being reflected in such an obvious way in house prices, most believe also that it is "something normal" and certainly "nothing alarming or catastrophic", stresses Alberto Prieto, director of the Residential division of the consulting firm Knight Frank.

“If you are noticing this change in something, it is, without a doubt, in sales. A few years ago it was unthinkable to buy a house if it was not off-plan and today there are already promotions in which not all flats are sold. But you don't have to dramatize because that has always been the norm. It's getting back to normal. The atypical thing was what happened in the 'boom', that everything was sold off plan, and not that close to 20% of the houses in a promotion were delivered already finished, "says Prieto.

The promoters believe that, in general, it continues to sell well, but the truth is that, in some places, the proliferation of 'turnkey' houses is a more generalized reality: «On the coast there are areas where sales take paralyzed for a year, ”says José Antonio Pérez, professor at the Real Estate Chair at the Institute of Business Practice (IPE).

In addition to the coast, there are those who assure that this phenomenon is also present in Madrid. “It is being appreciated in the center of the capital, where houses have very high prices. Before, everything was paid for, but this is not the case anymore. On the other hand, the products that traditionally took longer to sell are still many of those delivered 'turnkey', such as large homes, those with the worst orientation, those located on the ground and first floors... », Says Jesús Martín de Prado, president of Larcovi.

This company claims it does not have 'turnkey' houses, but acknowledges that the pace of sales has lagged considerably. "What used to be sold in 12 months now sells in 18 or 20 months and this delay is a clear indication that something is happening, that a change in trend is coming", continues Martín de Prado.

And this is only the beginning. «This is the first indicator and, later, others will come, since the increase in sales terms will have an influence on prices: as this trend increases, prices will tend not to rise and may even in some cases reach go down or, at least, have to make significant discounts to sell houses, "says the president of Larcovi, who confirms that this situation did not occur at the time of the 'boom,' where the normal thing was to sell everything off plan.

Martín de Prado also compares the slowdown that will be experienced in the sector with the crisis that took place in the 1990s: «At that time, demand was very weak and the normal thing was that about 60% of the homes in a development did not it was sold off plan ».

“It is not likely that this phenomenon of reaching 50% or 60% of unsold houses will happen again because today the situation is different. The demand continues to be in many places, like Madrid, almost infinite. What is foreseeable is that the percentage of houses sold off plan will go from 100% to 80% or 85% and that the rest will be sold later, ”says Prieto.

Economic context

From the consulting firm Jones Lang LaSalle they corroborate: «The current era cannot be compared with other periods because in Spain we are in an economic cycle that has nothing to do with the previous ones. Interest rates are lower than ever, financial institutions are increasingly extending the terms, and so on, ”says Carlos Ferrer-Bonsoms, the company's director of Residential.

“So far this year there has been a slowdown in the rate of sale of houses, but this has not been reflected in prices. In addition, although it takes longer to sell, we are still at very acceptable rates and much higher than normal, to what happened before the 'boom' ”, they confirm in Jones Lang LaSalle.

Ferrer-Bonsoms considers that it cannot be generalized. “Where it is most noticeable is on the coast and in the most central areas of cities, where prices have already peaked. Although a few years ago those same areas were also the most expensive, there have been spectacular price increases. Before, everything ended up selling, but now it is not so easy ”.

"It is logical that the trend begins to be more noticeable in the second residence market for a logical reason: it is a home that you do not acquire out of necessity and, therefore, you can do without it," say sources in the sector.

As for the root of the problem, all the experts point to prices: “We have been talking for years that housing is expensive. The difference is that the rise that has occurred in some areas is so spectacular that people can no longer pay. Before, although expensive, the prices were much more adjusted. There was not the pressure that exists today.

From the Institute of Business Practice (IPE), the director of the Real Estate Chair, José Antonio Pérez, agrees that prices have stretched so much that they have made the situation unsustainable in certain locations. «On the Costa del Sol, sales have been paralyzed for a year. That happens because two-bedroom homes are being sold for 300,000 euros. On the other hand, in Almería, Granada or Murcia, sales are still very good because the product that is sold has competitive prices: 180,000 or 210,000 euros, ”says Pérez.


Javier Sarrado, from the consulting firm Aguirre Newman, affirms that «today, of all the promotions completed, 16% still have product to sell, when three years ago, in the middle of the 'boom', that percentage was much lower. On the coast it is even more pronounced, because there 23% of the finished developments have 'turnkey' houses ”.

Similarly, several experts point to another factor that will make this trend increase: the psychological. “People have been buying off plan because they knew that each month that passed the house was going to be more and more expensive. But in reality, everyone prefers to see the finished product and be able to move into their home without waiting. It is still more expensive to buy 'turnkey', but, over time, there will be a reflection of the slowdown in prices ”, says the president of Larcovi.

«It is easier to buy something that is already finished and you know what it is like, than to buy by looking at just a map. Until now it did not happen because the houses rose in price and people did not wait to buy. On the other hand, now that there are promotions with 'turnkey' products, there may be a 'contagion effect'. That is, if someone goes to a sales booth and sees that there are finished homes for sale and comes back the following week and the houses are still not sold, people will not be in such a hurry to buy, "they say in Jones Lang LaSalle.

From Knight Frank, they do not forecast falls in prices - "because the houses are not going to lose value" - but they assure that there are already developers who are offering discounts to their clients, who make offers if they buy before a certain date, and so on.

«Another aspect that confirms that we are not 'in anything goes' is language. Now sales have gone from being called sales to operations, because every time a client approaches we study their situation and try to close the operation. A few years ago, if someone could not assume the price of a house, nothing happened because after a while another client came to buy, ”says Prieto.

“This end of the 'boom' has not caught developers by surprise because they have been talking about this happening for a long time. In fact, although the land is still selling very well, the developers are now more cautious. Five years ago they could buy anywhere, but now it is not worth everything, they think about it more », say other experts.

The promoters acknowledge that it now takes longer to sell but they are optimistic: “Obviously the sales rates have dropped, but only in certain locations. Also, the fact that two or three houses remain to be sold at the end of a promotion is not alarming. If the trend continues, we will adapt to the changes and reduce the production of houses ", they say from a company.


“It is true that in the boom years, more than selling the apartments, they were sold, and that no longer happens. In any case, today, when we deliver a promotion, all the product is sold, or almost everything, with rare exceptions ”, points out Eduardo Centoira Díez, from the commercial department of Vemusa Dos.

“It is also true that before, 10 or 12 months after starting to market a promotion, we had everything sold and, now, that period has been extended to 20 or 22 months. But they are still very reasonable times ", says Centoira,

In addition, "people are still looking for promotions with a distant delivery date because it is not the same to pay 20% of the house at the time of signing the deeds, than to do it in 20 or 22 months", he confirms.

At Detinsa they believe that “there will be no problem with accessible / cheap / protected products. No finished works with the 'For Sale' sign will be seen on those products. In addition, there will be a reduction in the price increase in expensive housing, but not a reduction ”, says the general director of the developer's Real Estate Area, Fernando Moliner.

As for the financial effects that turnkey houses have for a company, "it will always depend on the number of flats that have been left unsold, but in many cases, the company can run out of profits," they say in the IPE. «The key is to know with what number of houses sold you have the costs covered. This cap is set by the promoters and depends on the investment in land, the price of the houses, "they conclude.

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