In transaction terms the Spanish property market increased by 6 per cent in May compared to the same month last year, according to the latest data from the National Institute of Statistics. This looks like drawing a line under years of declining sales.
There were 25,306 home sales (excluding social housing), up 14 per cent in a month and +4 per cent compared to two years ago. Looking further back, however, the market is still dramatically below its boom-time highs, down 64 per cent compared to May 2007.
Year-to-date, the market is still 6 per cent smaller than it was at the same time last year, but with three consecutive months of annualised gains in sales activity, the May sales figures provide more evidence that the Spanish property market has found a floor, as illustrated by the chart above. Though hardly a cause for celebration, finding a floor is a prerequisite for any recovery, however feeble or slow to get off the ground it then turns out to be.
There is also a clear divergence forming between new build and resales, with resales growing 18 per cent in a year, and new builds down 6 per cent, with the differential in sales widening to 6,382 units. This divergence will carry on rising in the months to come.
Regional there was a clear trend towards rising sales in coastal areas where foreigners tend to buy, and falling sales in the interior where locals are the main buyers. Sales were up 43 per cent in the Costa del Sol, and 41 per cent in the Balearics, increases no doubt driven by foreign demand. Meanwhile, sales plunged 60 per cent in Guadalajara, 50 per cent in Soria, and even fell in Madrid, by 6 per cent.
After seven years of almost continually declining sales, with double-digit percentage declines in every year bar 2010, when sales increased 5 per cent thanks to Government intervention, and last year, when sales fell just 1 per cent, any change from the now familiar story of relentless contraction is good news, no matter how trivial the improvement.
Spanish Property Market Sales Summary Table
? Lionel Westell says:
A trend which has confirmed your earlier predictions. A trend that will continue for some years to come.
Phil says:
Just because you are an estate agent does not mean you can predict future events, many before you have got it wrong in Spain for years now, to the detriment of unfortunate buyers who bought far too soon and are nursing large losses now. As an agent you are bound to keep talking the market up. However, let’s hope you point out the many pitfalls in this market and details such as VAT on new properties rising from 4-10% again coming later!
The inland property market is nowhere near the rosy picture being painted on the coast.
If the sales figures continue as they are, it would still take some 7 years to offload current stocks of unsold homes, and in that time many other homes will hit the market including more new build which is madness with these levels, adding to the huge glut!
Mark Stücklin says:
This article reports the latest sales figures and tries to interpret them in a way that might be helpful for readers. Suggesting the market has found a floor, as the chart at the top of this page clearly illustrates, is hardly talking up the market. This is a property information website with advertising, not an estate agency.
Phil says:
You misunderstand my reply, I was not suggesting you are an estate agent, now was I suggesting SPI was talking the market up, my reply was to Lionel Westell who is an agent.
Phil says:
You misunderstand my reply, I was not suggesting you are an estate agent, nor was I suggesting SPI was talking the market up, my reply was to Lionel Westell who is an agent.
Ron says:
I read all three messages and aware of the confusing email written by Phil (I also got it wrong). Just wanted to bring my opinion about this blog. I have followed it closely for about 2.5 years and up to now, I think Mark is providing a very honest and professional analysis. So just some words of positive feedback.
Phil says:
Well observed Ron!
SPI has good honest information for those wishing to buy and sell, and, other Spanish matters that many may be unaware of.
A different picture is often portrayed from agents and developers in what is still an unregulated property market, something that buyers and sellers also need to know.
Mike says:
We are looking to buy a property in the Marbella area and have rented an apartment as a base while we get to know the market again during our regular visits.
I say ‘again’ because we looked at buying a townhouse in our target area back in 2005, the price at that time was around €400k and last month we looked at a near identical property in the same development – now with an asking price of just over €200k.
We have met quite a few agents over the last few months who have told us the market is recovering and that prices are on the rise.
Thankfully I read SPI and it makes me feel well prepared and better informed than the agents I meet. So thank you for the articles and please keep up the good work.
Mike
Phil says:
You must be relieved Mike that you have waited 9 years to potentially get a property for what looks like half it’s original price, if the same exchange rate then 1.43 applied to today’s price of 200k euros you’d be paying £139,860, however as the rate today is 1.26 you will be paying £158,730 so still not half the price one might think it was, and this is before costs also subject to ex. rates.
Remember it’s still a buyers’ market with such a glut of homes to clear, take a look at R R Acuna & Associates figures, they say there are still 1.72 million homes for sale without any more entering the market. Acuna also believes prices will continue to fall 5-7% per annum for the next 3 years, potentially another 21% lower than today’s prices, and whilst Spanish property sales were up 26% in March according to a SPI article, experts warn of skewed data caused by tax changes.
It’s interesting and probably wise that you clearly don’t trust the ‘quite a few agents’ you’ve met all apparently saying the same thing!
Are you buying for holiday or to live?
Leif Lundqvist says:
I am an outsider who is looking also to buy property in the Marbella area. Interesting to read the analysis of Mark, and overwhelming to see the amount of property for sale in the area, new and resale. It certainly seems in this situation very important to buy the RIGHT property, as resale seems very difficult. Is there any analysis on the difference between different price brackets, i.e.villas in the 500-800 K range as opposed to apartments in the 200-300 K range?