Tracking the monthly change in home sales in Barcelona and Madrid should help reveal the impact, if any, of the independence drive on the Catalan housing market.
The chart above shows the monthly change in sales (year-on-year) to date in 2017 for Barcelona province and the Madrid region, using data published by the National Institute of Statistics based on the number of sales deeds inscribed each month in the Land Registry.
With the exception of April, when sales in Barcelona fell by 2%, both cities have had a good year, with home sales increasing by double digits in every month to August, though sales increases were larger in Madrid.
Up until May the change in sales followed a very similar pattern in both cities, but from June onwards, sales growth started to falter in Barcelona, whilst continuing to grow strongly in Madrid.
By September (the latest available figures), sales had stalled in Barcelona, whilst growing 28% in Madrid. What has taken the wind out of Barcelona’s sails? My hypothesis is that the Catalan independence drive is harming the Catalan economy, hitting confidence, and discouraging international investors, all of which is reducing the number of potential buyers in Catalonia, and its capital Barcelona.
The constitutional crisis in Catalonia really exploded into full view with the disputed referendum at the start of October, but the crisis had been building for months and years before that. By September it was flashing red on the radar of anyone familiar with local politics, which I guess could have given enough potential buyers cause to wait and see, resulting in stagnant sales in September. It will be interesting to see what story the figures tell in the next few months.
Foreign demand for property in Catalonia has clearly been affected by the constitutional crisis, as some international investors choose to wait and see, but agents tell me that local demand shows no sign of trouble so far. If local demand holds up then the only segment that will cool is the prime market in Barcelona, where foreign buyers are a big chunk of demand. If local demand also cools down as a result of this crisis, it will be sure to show up in these figures over the next few months.