Government departments can’t agree on how many new homes were sold last year.
The Department of Housing, part of the Ministry of Public Works (Fomento) says 56,377 new homes were sold in 2013, 19pc of the 300,349 total, whilst the National Institute of Statistics (INE), run by the Economy Ministry, puts the figure at 145,241 (47pc of the total), two and a half times bigger.
Given the importance of the housing sector to the Spanish crisis, it’s no small matter. The difference between the two figures is so great it’s counterproductive to publish either of them.
The departments count new home sales in different ways, which should explain the disparity.
According to El Mundo, the INE classifies all properties finished in the last 12 months as new homes, regardless of whether they have been sold once before or not. After 12 months they are no longer considered new, even if they have never been sold or occupied.
The Housing Department, on the other hand, counts all homes sold for the first time (with VAT) as new, regardless of when they were built.
The following chart created by El Mundo illustrates the disparity. It compares home sales figures from the Housing Department (left) with the INE (right), for 2012 and 2013, with new home sales shown in dark blue.
Today in Spain there are hundreds of thousands of homes on the market that were finished years ago but have never been sold. As and when they sell, the Housing Department will count them as new, whilst the INE will not.
“With this disparity in the official figures the impression Spain gives to international investors and analysts is lamentable,” says a Spanish housing market expert, quoted in the Spanish daily El Mundo.
Right from the start, the Spanish housing market crash has been exacerbated by official figures muddying the waters with contradictory data. International investors have been put off by the lack of transparency and erroneous figures suggesting the price adjustment has not gone far enough.
Thoughts on “New-home sales figures in disarray”
Will Needham says:
Sorry for asking what might be a dumb question…but given the discounts on key ready product, built at any time and sold for the first time last year vs properties completed and sold in the last year: How is it possible ? Since INEs count includes all Fomento, except for second sales of the same properties within a year of completion.
Have vasted numbers of properties completed in the last year been sold more than once ?
The only way for the INE figures to be higher than Fomento would be if multiple transactions on properties built within the last year took place. A scenario which seems highly unlikely (especially given the transaction costs).
Mark Stücklin says:
Yes Will, you would expect it to be the other way around.
New build sales figures have been weird for years thanks to the shenanigans of banks so I don’t pay them too much attention. I guess it’s possible that large numbers of homes have previously been transferred from one balance sheet to another, paying IVA in the process, before the “certificado de final de obra” was issued, therefore not counted by the INE as a new sale. Now construction is finished and the certificado issued they are sold on by the bank, paying ITP not IVA, and counted by the INE as a new sale.
It’s also possible that the article by El Mundo got the story wrong.