NOTARIES: Homes Sales Up, Prices Down, What Gives?

spanish home sales march 2015

Spanish home sales are rising by double-digits, whilst property prices are falling. What is going on?

The number of homes sold in March increased by a healthy 12 per cent compared to the same time last year, but house prices slumped by 7.5 per cent in the same period, reveal the latest figures from the Spanish Notaries’ Association (Consejo General Del Notariado).

The Notaries witnessed 34,736 homes sales in March, up from 30,950 the same time last year, a rise of 12 per cent.

notaries-home-sales-yoy-mar-2015

The increase in sales would have been even bigger were it not for another huge monthly fall (32.6 per cent) in the number of new flats sold, as the supply of attractive new homes dries up.

spanish home sales march 2015

FALLING PRICES

Rising sales were accompanied by yet another month of falling prices – the biggest in more than a year. The average price of property in Euro per square metre was 1,202 €/sqm, down 7.5 per cent on last year, and 36 per cent since the start of the crisis in 2007.

spanish home prices march 2015

MORTGAGE LENDING UP

The number of residential mortgages used to buy property rose 28 per cent, to 14,755, which means that 45 per cent of home sales involved mortgage financing, up from 39 per cent last year. This is a clear sign the Spanish mortgage market is returning to life, and bodes well for those segments of the Spanish housing market, like prime Barcelona and Madrid, where pent up demand is now getting the finance it needs.

spanish mortgages for home sales march 2015

spanish mortgages for home sales march 2015

spanish mortgages for home sales march 2015

ANALYSIS

We are into the eighth year of the Spanish property crisis. As far as the supply of homes for sale goes, the most attractive have already sold, so the remaining stock will increasingly be sold on price. That could increase downward pressure on average prices in the coming months, especially whilst the supply of new projects coming onto the market is still almost non-existent.

The March slump in house prices is also a sign of volatility on thin trading. The Spanish property market may have increased 12 per cent in a year, but it is still depressed for a country the size of Spain. When transactions are low, prices changes are amplified. The 12-month moving average of price changes is less volatile (green line), and suggests that average prices are stabilising. “Despite the oscillating monthly figures, the trend is towards stabilisation,” the Notaries conclude.

As always when it comes to property prices, national averages are not much use for understanding price dynamics in local segments. Prices can be plunging in one segment, and rising in another, and the national average leaves us none the wiser.

Comments

comments

3 thoughts on “NOTARIES: Homes Sales Up, Prices Down, What Gives?”

    1. David

      I agree Campbell, there are so many Spanish analytical reports of property which often contradict each other, so it is difficult to trust the market. This one seems like a case of clever accounting.

      Is everyone taking their eye off the ball re Greece being unable to repay it’s next tranche of interest which it doesn’t have, a Grexit is being kicked down the road constantly, if it eventually happens, then what price Euro property especially in Club Med countries including Spain?

  1. Bede

    It’s called the theory of supply and demand. If something is cheaper people buy more of it….I’m not sure why people think this shouldn’t apply to the real estate business. Th reverse of this is that if the price is too high people buy less. Also, an oversupply will drive the price down. Conclusion? Prices are still falling as there are still far more sellers than buyers and this will continue until the oversupply dries up. Don’t hold your breath………

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