Despite fears that sales would plunge after a hike in VAT on new home sales at the start of July, the Spanish property market had its best month in almost 2 years.

There were 38,838 home sales in July, up 15pc on the same time last year, and 16pc on the previous month, according to the monthly figures from the National Institute of Statistics.

The following table shows how sales have changed in the year to July over the last 4 years.

Year to date (cumulative sales to end July), the market is 10.3pc bigger than last year, though still down 47pc compared to 2007.

On an annualised basis, sales have increased every month this year. If the figures are a true reflection of the market, that suggests that the worst is behind us, assuming there is no second act in this drama.

New home comeback

Surprisingly, sales of new homes leapt an annualised 21pc, and 26pc compared to June. I expected sales to plunge after an increase in VAT on new home sales came into effect at the start of the month.

Once again, new home sales were greater than resales, as they have been most months since the crisis began. In a normal market, resales should be bigger than new home sales. One explanation for this anomaly might be that banks are using a lending bias to off-load their new homes. Some banks are reported to be lending up to 100pc on new homes they have taken over from bankrupt developers.