The latest report from the Spanish Property Registrars, based on properties inscribed in the Registry during the first three months of the year, provides fresh evidence that the country’s grinding property slump is running out of steam.
Home sales rose 14% in the first three months of the year compared to the last three months of 2014, prompting the Registrars to talk of a “change of trend.” There were 83,022 sales in the period, (37,731 new build and 45,291 resales), and 311,400 over the last 12 months.
However, on an annualised basis, and rolling 12-month basis, home sales were still down, by 8.22% in the latter case, driven by a slump of 18% in new build sales over the last 12 months. So the quarterly rise needs to be understood in a wider context of falling annualised sales, which are still at a record low.
“After six consecutive years of house price declines, especially intense in certain periods, everything points towards the end of this scenario drawing to a close, giving way, at the least, to price stability,” says the Registrars’ report.
Most sales were in Andalusia (16,336), Madrid (13,026) and Catalonia (12,190), and the Valencian Community (11,996).
Sales of new homes were 45% of the market and resales were 55%, and the proportion of new sales is expected to continue shrinking.
“The almost total lack of new housing starts in recent years means the only option for new homes are those built during the boom and still for sale. A large share of them are in the hands of the financial institutions, being sold actively with price reductions, guaranteed financing….As this stock reduces, the relative weight of new home sales will decline to ever smaller quotas,” say the Registrars. To put it another way, new home sales will collapse as the pipeline of new homes runs dry.
Price Declines Calm Down
Prices also showed signs of improvement after years of accelerating declines. Average national house prices rose 0.84% in a quarter, and fell 1.7 per cent over 12 months – a big improvement on the double-digit annualised declines the same time last year.
And as this following chart shows, annualised price declines appear to be heading for positive territory after at least six years in the red.
“This is the first time in eight years that sales and prices have improved together. This situation hasn’t happened since the first quarter of 2006,” explains the report.
Foreign Demand Bolsters Market
Foreigners buying property in Spain once again represented more than 12% of the market, though their market share fell slightly to 12.23% in the first quarter, down from 12.85% in the previous quarter.
“Many nationalities now see the Spanish property market as a very interesting option, and a good moment to buy a home, especially focused on second residencies in tourist destinations,” explain the Registrars.
British buyers are still number one in terms of volume, with around 17% of key foreign markets, followed by the French, Russians, Germans, Belgians, Swedes, Italians, and Norwegians.
Foreign demand for property in Spain is one of the main reasons why the housing market’s vital signs are finally starting to show signs of life.