What about the overall demand for Spanish property in 2007?

According to figures from the Spanish property register, the Spanish property market shrank by 9.3% in the first 9 months of 2007 (the latest information available), and by 12.11% over 12 months to the end of September 2007. So registered property transactions over 12 months to the end of September 2007 fell to 830,605 sales compared to 945,042 a year before.

Just looking at the third quarter of 2007 (the latest period for which information is available) the fall in sales is even more pronounced. Compared to the same quarter in 2006, registered property transactions fell 15.8% from 224,055 property transactions to 188,256. The biggest falls were in Catalonia (-34%), the Balearics (-32%), the canaries (-26%), and the Valencian Region (-21%). The smallest falls were in Madrid (-2%),  Andalucia (-4%), and Asturias (-10%). The only region in which property transactions increased was Cantabria, in the north of Spain, where the number of transactions increased by 13% compared to the same period in 2006.

The sales figures of Spanish developers are another indicator of demand in 2007. Developers’ sales fell by between 40% and 70% in 2007, with the fall accelerating towards the end of the year. Taylor Wimpey, a British developer with projects in Spain, has reported Spanish sales down by 44% in 2007, and another developer, with projects on the Costa del Sol, reports that sales collapsed completely in the second half of 2007.

Another market indicator is the number of real estate agents that have closed down. According to one source, half of all real estate agents  in Spain – some 40,000 – closed in 2007, with more expected to fold in 2008. Another source claims that 32,000 Spanish real estate agents closed in 2007. Whatever the true figure, it is clear that demand and transactions are falling heavily if so many real estate agents in Spain are going out of business.

All the evidence suggests that the Spanish property market contracted substantially in 2007 as a result of falling demand. Although the data is not yet available, it is reasonable to assume that the downward trend in sales accelerated in the last quarter of 2007.