The Spanish property market continues to expand, whilst house prices keep heading south, show the latest figures from the General Council of Notaries.

Home sales were up 8.4% in May compared to the same month last year, “reflecting a recovery in monthly sales,” explain the notaries. There were 33,504 homes sales witnessed by notaries in the month. Adjusted for seasonality, home sales were 12% higher in May.

Once again, the market expansion was driven by a big increase in resales (+14.5%), offsetting an even bigger fall in new home sales (-21.5%). The Spanish property market would be expanding faster were it not for the lack of attractive new homes for sale.

HOUSE PRICES

The average price of property in Spain, based on the sales witnessed by notaries in May, was 1,226 €/m2, a fall of 2.5% compared to last year, and down a cumulative 35% since the Spanish property bubble burst in 2007.

Resale flats prices remained almost unchanged at 1,339 €/m2, whilst new home prices fell 10% to 1,505 €/m2. Why are new home prices falling so much? Perhaps because the excess inventory of new homes being sold, much of it by banks, gets less attractive with each passing year, as the more attractive homes have already been sold. Lower prices are used to sell less attractive properties.

MORTGAGE LENDING

Mortgage lending was also up in May, by an annualised 26.4%, to 14,213 new loans. The average loan value was 6% higher at €119,797.

The percentage of transactions that involved mortgage financing was 42.4% in May, with an average LTV of 77.9%.

Tellingly, construction mortgages granted to developers for new projects were also up in May, by 25% to 397 loans, in a first sign that banks are prepared to lend to developers again.

“The figures from the sector continue indicating a stabilisation of the Spanish real estate market,” conclude the notaries.