Market stages double-digit rise in October

The Spanish property market has increased on an annualised basis for three months in a row, as buyers bring forward their purchases to take advantage of tax breaks that disappear at the end of the year.

There were 22,489 house sales in October (excluding social housing), 14pc up on the same time last year but 1pc down compared to the previous month, according to the latest figures from the National Institute of Statistics.

So yet more evidence that the Spanish property market has found a floor, and even staged the most feeble of recoveries, as illustrated by the chart above (2012 in red).

On an annualised basis the Spanish property market has now grown for three months in a row, having fallen continuously since March 2010 before that.

This comes after data from the Department of Housing showing that the Spanish property market was almost steady in Q3, as reported in the previous news item in this blog. So data from two different sources is telling a similar story.

The bad news is that the recent increase in sales will probably be short-lived. Most analyst attribute the increase to the end of tax breaks for buyers at the start of next year, when mortgage tax relief goes, and VAT on new homes goes up from 4pc to 10pc. This is bringing forward sales and will probably lead to a new slump in sales at the start of next year.

The Spanish Developers Association forecasts that the year will end with 325,000 home sales, down 7pc on last year.

The following table summarises all the key transaction data for the last six years (click to enlarge).

One thought on “Market stages double-digit rise in October

  • Do you think the Spanish govt will really raise IVA on New Property to 10% in January?

    Last year they waited till the last moment (between Xmas and New Year) to announce the extension. Does anyone think they are likely to do the same to preserve this fragile recovery?

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