The Spanish property shrank by one per cent in October compared to the same month last year reveal the latest monthly sales figures published by the General Council of Notaries based on property sales witnessed by notaries during the month.
There were 32,694 home sales signed in October, down 1.1 per cent compared to October last year. Flat sales were down 4.2 per cent to 25,800, and but single-family home sales were up 12.10 per cent to 6,894 (see chart above).
Flat sales dominate the market, and resales were up 5.2 per cent in October, to 21,421 sales. The reason why the overall market fell one per cent was because of the collapse in new flat sales (flats never previously sold), down 41.6 per cent in October. It’s getting increasingly difficult to find attractive new flats to buy in Spain now that the new development pipeline has run dry, and the dregs of the building boom fail to excite buyers.
Rising Mortgage Lending Signals Potential Recovery In Prime Spain
Home sales have increased in seven out of nine months this year, suggesting that the market has found a floor this year, and is no longer contracting. But the key to recovery is always mortgage lending, and on that front the news is robustly positive, with the biggest implications for the prime market.
New residential mortgage lending has increased dramatically this year, albeit from a historically low base. There were 12,797 new residential mortgages signed in October, up 39.9 per cent on the same month last year. New residential mortgage lending has increased between 27 per cent and 55 per cent every month this year, robust increases by anyone’s standards.
In particular, rising mortgage lending bodes well for the the market in prime areas of cities like Barcelona and Madrid. When banks start lending again, who do they lend to first? Most likely to affluent borrowers with good credit scores looking to buy in the best areas. If so, you can expect to see an increasing amount of money flowing into prime areas.
In summary the October figures from the notaries suggest the market is still on course for some sort of recovery, despite an overall decline in sales driven by the slumping sales of new flats. Rising mortgage lending, in particular, bodes well for the market in prime areas, assuming that an external shock doesn’t derail Spain’s nascent economic recovery.