Demand keeps shrinking whilst the glut of Spanish homes for sale keeps growing
There were just 22,065 home sales in September (excluding social housing), 30.5pc down on the same month last year and 62pc down on September 2007, according to the latest figures from the National Institute of Statistics (INE).
Monthly sales this year since March have been the lowest since the crisis began, as illustrated by the chart above. The positive start looks like a dead-cat-bounce.
On a year-to-date basis sales in 2011 are 20pc below last year, and 56pc below 2007. The big question is can it get any worse in 2012? Some experts think so.
The following chart shows how bad sales have been this year, falling by as much as 40pc in August, with an average annualised fall of 29pc each month since March. the market is shrinking fast, a clear sign that prices are still too high.
All this at a time when Spain is saddled with a monumental glut of homes for sale, not to mention unemployment of 22pc and rising. More than 40pc of young Spanish adults are out of work. Demographics are also starting to blow against the Spanish economy.
Unless the next Government takes radical steps to liberalise the economy, boost employment, and force banks to stop keeping property prices artificially high, it’s hard to see a way out of this mire.
What about holiday homes? Here the situation is a bit different because demand is internationally diversified, at least in some areas. Some quality segments of the holiday-home market will recover before the overall housing market. That said, this year and next year will be very tough.
Summary table of the latest sales figures: