After dipping below 20,000 in August, home sales jumped back up to 25,414 transactions (excluding social housing) in September, according to the latest figures from the General Council of Notaries, illustrated in the chart above.

On an annualised basis, September home sales were up 20.7% in total, with flat sales up 17.8%, and house sales (single-family home) up 24.9%.

Looking at prices, overall residential property prices fell 2.9% over 12 months, with flats down 1% and houses down 6.5%. The price of new flats, however, rose 3.7%.

The average cost of property in Spain now stands at 1,319 €/m2 for flats, and 975 €/m2 for houses. Both flat and house prices rose compared to August.

Mortgage Lending Up Dramatically (From Low Base)

Mortgage financing was used for 9,943 purchases in September, with an average loan value of €111,000.

The number of mortgages used to buy homes was up 50% compared to the same month last year, and has been growing by between 27% and 50% each month for the last eight months.

ANALYSIS

Sales volumes and property prices are key measures of the health of the Spanish property market.

Sales volumes have increased on an annualised basis in seven of the last eight months, as illustrated by the next chart.

Despite a small contraction in July, the overall picture of the market this year is one of substantial increases in sales, with September reaffirming the trend towards rising home sales. The bad news is, home sales are still deeply depressed for a country the size of Spain, and miles away from the highs of the boom. So although the Spanish property market appears to have bottomed out in volume terms, the current level of growth in sales won’t be enough to see off the Spanish housing crisis any time soon.

Turning to property prices, the continued decline in average national prices reflects the fact that it is still a buyers market after seven years of crisis. The market is oversupplied with property, and there are not enough buyers around, even with the increase in mortgage lending.

There is an interesting trend emerging towards higher prices for new flats, but otherwise it’s likely that Spanish house prices will stay in negative territory for some months to come.

Buyers and Vendors Should Focus On Segments

It helps to know what’s going on in the overall market, but it’s important to remember that national figures disguise big differences between local market segments. Whilst the overall market remains deeply depressed, sales and prices in prime areas of the coast and cities like Barcelona and Madrid are doing much better.