Spanish home sales declined 10.9 per cent in January, compared to the same time last year, according to the latest market report from the General Council of Notaries.

There were 21,320 home sales in January, a decline of almost 11 per cent compared to a year earlier, and a surprising drop considering sales have increased substantially almost every month for the last 12 months, with the exception of small declines in July and October last year.

Note that these figures are national numbers and shed little light on the performance of local segments, some of which may have performed well in January against a backdrop of overall weakness.

The Notaries suggest the decline might be due to the end of tax breaks for home buyers, which were scrapped a couple of years ago. “Despite this fall in the monthly figures, the series reflects a stabilisation in sales,” they explain in their report. “This contraction could be explained by the end of the base effect once sales returned to normal after the main-home tax deduction finished.”

The annualised fall can be mainly attributed to a fall in resales, which increased every month last year, but fell 7.6 per cent in January. New home sales were down 32 per cent, but that is hardly unusual in Spain today given the scarcity of attractive new homes on the market.

Price Declines

After ending 2014 with a tiny increase of 0.2 per cent, average national house prices slumped 6 per cent in January, a sign the market is still quite volatile thanks to low sales. As far as average national Spanish house prices are concerned (all types of homes), it looks like vendors still lack pricing power, and there could still be many months to come of lower prices.

Mortgage Signings Cool

The mortgage figures from the notaries delivered an even bigger departure from the recent trend, with the annualised increase in new mortgage signings falling from 65 per cent in December, to 11 per cent in January. Though still positive, it could be the first sign of trouble to come. It’s too early to say.

Note that these figures are national numbers and shed little light on the performance of local segments, some of which may have performed well in January against a backdrop of overall weakness.

Note: I recently reported the Spanish property market had the best January sales in years, which was true of the figures published by the INE based on data provided by Property Registrars. The reason for the difference is that the INE’s figures are based on sales closed in the preceding months, and registered in January. The Notaries’ figures are based on sales closed in January, so more timely and relevant. As usual, the Spanish property market abounds with conflicting information.