A plunge in home sales recorded in Madrid in September could be good news for the local market, signalling a lack of stock and return to off-plan purchases.
Home sales in Madrid fell 30.7pc according to sales inscribed in the property register in September, reflecting sales completed a month or two earlier, and reported by the National Institute of Statistics. The Spanish national average decline in residential property sales was 8.6pc, or 6pc excluding social housing.
A plunge in home sales of 31pc in the Spanish capital so late on in this crisis sounds like bad news, but it might actually be sign of better things to come, argue some experts.
The reason sales are down so heavily in Madrid, compared to the rest of Spain, could be due to a tightening supply of homes for sale in areas where people want to buy, plus a return to buying off-plan, which goes unrecorded in these figures.
According to Carlos Smerdou, a director of the property company Foro Consultores, a sizeable chunk of the sales activity today in Madrid is off-plan, which goes unrecorded in the property register until the homes are built and delivered, which could take around two years. If off-plan sales are growing, that is a good sign for the local market.
But there is also a less flattering way to interpret the 31pc decline in Madrid home sales, according to Fernando Encinar, head of research at Idealista.com, a property portal. Sales volumes are so low that even small changes can lead to oversized percentage swings, both up and down. The house market in Madrid is now “a market with very few operations where any small increase or decline provokes large percentage changes,” he says.