The latest figures from the Government (Fomento), based on house sales witnessed by Notaries, show the Spanish property market up and down like a yo-yo, in large part due to tax changes.
There were 90,746 house sales in Q2, a 22pc increase Q1/Q2 but 41pc decrease Q2 2011 / Q2 2010, show the figures. Sales in recent quarters have been much more volatile than normal, in response to changes to taxes on property sales.
The chart above shows quarterly sales broken down by new homes (red) and resale (blue), illustrating how sales of new homes have collapsed by an annualised 57pc to just 30,581, and resales by 26pc to 60,165 in Q2.
New home sales now represent just 34pc of the total, down from over 50pc last year.
The large annualised fall in sales of new homes can partly be explained by a rise in VAT at the end of 2010, which brought forward sales that would otherwise have taken place this year. The Government has subsequently slashed VAT from 8pc to 4pc in a panic move to stimulate the market before the elections.
But there is another reason, which is that new home sales were always doomed to fall once the sales contracts signed during the boom gradually worked their way out of the system. I have been saying as much for more than a year.
Foreign buyers to the rescue
Much hope is being pinned on foreign buyers coming to the rescue, as I shall reveal in a seperate article. The latest figures reveal foreign residents* bought 8,514 homes in Spain in Q2 (+23pc Q2/Q1), led by Alicante (2,308), Málaga (1,110), Barcelona (651), Santa Cruz de Tenerife (599) and The Balearics (567). If foreign buyers are going to solve the problem, they will have to come in far greater numbers.
For break-down of sales and quarterly changes see the Government press release (in Spanish)
*Foreign residents principally buying main homes, not holiday homes