Home sales data for June shows the biggest national market decline in five years, and areas popular with foreign buyers weren’t spared the kicking.

Spanish residential property sales figures for home sale deeds inscribed in the Land Register were down 8% countrywide in June , according to figures from the National Institute of Statistics (INE), based on source data from the Spanish Land Registrars’ Association.

Excluding VPO subsidised housing there were 37,236 deeds of sale inscribed in the Land Register in June, compared to 40,305 in June last year, a decline of 3,069 (-8%). There were 40,971 sales if you include VPO.

That’s the equal biggest fall in recorded home sales since February 2014, matching an 8% fall in April 2017 that was at least partly explained by seasonal factors. There are no seasonal factors to help explain away this June’s decline.

These figures relate to the number of deeds of sale inscribed in the Land Register each month, which can take place weeks or even months after the sale, so these figures lag the market by a month or two.

What about the number of sales actually completed in the month? For that we turn to the Association of Spanish Notaries, who provide figures on the number of sales completions they witness each month. They have home sales in June falling by 18.6% to 46,527 (including VPO) – the biggest fall in the last three years, and the third decline in the last four months, as illustrated by the next chart.

Both sets of figures point to a clear decline in the Spanish home sales trend, which has been on the increase for the last four years.

If you add a trend line to the data from the Registrars the sharp deceleration is abundantly clear, as illustrated by the next chart.

Looking at sales broken down by new and resale category, both types showed significant declines in June, with new home sales (that don’t include off-plan sales) down 11%, and resales down 8%.

Spanish home sales by region – June 2019

Turning to home sales by region, the next chart shows the year-on-year change in a selection of regions popular with foreign buyers.

Home sales fell in most of the areas popular with foreign buyers, led by Andalusia’s Huelva province (-43%), home to the western Costa de la Luz, but even Malaga (Costa del Sol) was down 22%. If home sales on the Costa del Sol continue to fall at this rate, who’s going to buy on all those new developments now under construction or in the pipeline?

At the other end of the scale home sales were up 15% in Andalusia’s Almeria province (Costa de Almeria) – a relatively small market (less than half the size of Malaga) – and 6% in Murcia, another smallish market.

Year to date (next chart) the picture is not so bad, though even in this case sales are lower this year than last year in the Costa del Sol, Costa Blanca, Balearics, and the Canaries – all areas where foreign buyers, in particular British buyers, play a key role in the market.

What’s going on?

My take is that the Spanish property market is slowing down in the face of the following headwinds:

• Global economic uncertainty
• Political uncertainty and instability in Spain
• Spanish economic growth coming into question, with unemployment rising
• New Spanish mortgage law restricting lending
• High transaction costs biting harder as house prices are higher
• All the usual Spanish market problems like unprofessionalism and the lack of transparency continuing to deter potential buyers, especially when other factors are giving them doubts
• Brexit undermining British demand

I think the Spanish property market is still some way short of its potential, but the figures suggest that some sort of slowdown is in the making, and I suspect this will continue whilst the headwinds listed above prevail.