Home sales fell to 110,709 transactions in third quarter, down 15% compared to same period last year, according to Spain’s property register. The good news is that the fall in sales appears to be bottoming out. The bad news is the market is now a lot smaller than it used to be, which spells trouble for vendors.
The chart above tells the story eloquently. It shows cumulative sales over 12 months to the end of every quarter, and you can see how the market has shrunk from just above 1 million sales over the 12 months to the end of Q1 2006, to just above 400,000 sales at the end of Q3 this year. In terms of transactions, the market has shrunk by around 60% over that period.
But over the same period the number of homes on the market has just kept growing, meaning there is a growing number of vendors chasing a dwindling number of buyers. Common sense suggests that means more power to the buyers, who will be pushing for lower prices.
Bouncing off the bottom?
The authors of the latest report the property register went out of their way to stress that, on a quarterly basis (Q3/Q2), home sales actually rose by 9.78%, from 100,850 in Q2 to 110,709 in Q3. That is the first time sales have risen on a quarterly basis in 13 quarters. Does that mean that the market has touched bottom and is now on the road to recovery? Perhaps, but we will need at least a couple more quarters of data to confirm if there is a trend towards increasing home sales.
The report also points out that sales in coastal provinces were hardest hit, thanks to a larger than average fall in the sale of holiday homes. The second homes segment is “one of the worst affected by the real estate crisis,” explains the report. Sales over 12 months were down 43% in Tarragon province (Costa Dorada), 37% in Huelva (Costa de la Luz), 36% in Alicante (Costa Blanca), 36% in the Balearics, 35% in Tenerife, 32% in Gerona (Costa Brava), 32% in Cadiz (part of Costa de la Luz), 32% in Castellon (Costa Azahar), 31% in Asturias (Costa Verde), and 31% in Barcelona province (Costa de Maresme and Garaf).