The latest figures from the notaries are reassuring for Spanish housing market watchers, as the recovery appears to continue for another month.
There were 34,268 home sold in February (transactions witnessed in person by notaries) according to the latest data from the General Council of Notaries (see chart above). That represents an increase of 23% compared to the same time last year (next chart).
Rising sales are being driven by a big increase in resales, whilst the decline in new home sales is getting smaller. It might not be long before new home sales turn positive in annualised terms, which could give the market more momentum.
The notaries publish their figures before other sources, so this is the most timely picture we have of what’s going on in the market at the start of 2016. With sales up 27% in January, and 23% in February, there is no sign in these figures of the recovery in sales losing steam. Buyers are still flooding into the market.
Average Spanish house prices (in terms of €/sqm) rose 0.6% in February compared to the same last year, having climbed from an annualised decline of -3% in February 2015( and -8% a year ago in March 2015).
The chart above suggest that, although house prices have crawled back into positive territory (based on the price of property sold), market fundamentals like supply and demand will keep a lid on average prices for now (though some hotspots like Barcelona are already increasing by double-digits). And house prices are still 30% below their 2007 peak, according to this data.
In the context of the SPI House Price Index Tracker, which includes the seven most watched house price indices in Spain, the latest data from the notaries reinforces the picture of Spanish house prices stabilising in mildly-positive territory, after years of big declines.
The most reliable way to work out where any advanced housing market is headed is to look at mortgage lending. If banks are enthusiastic about extending mortgages, then sales will go up. The latest figures show that banks are still keen to lend to property buyers in Spain. There were 15,630 new mortgages signed in February, an increase of 35% over the same time last year (see next two charts). That bodes well for the market.
Based on the figures for January and February, it’s been a good start to the year for the Spanish housing market. Growing sales are a healthy sign as it suggests buyer confidence is increasing, more people can afford to buy their home, and it is good for the Spanish economy. Foreign buyers taking advantage of Spain’s low house prices are also probably helping to lift the market, though the notaires have not published any breakdown by nationality this time. And stable house prices are also welcome after years of declines, as fast-rising prices bring their own problems. Let’s hope this trend continues for many more months.