The latest home sales figures from the National Institute of Statistics (INE), and the Association of Spanish Notaries, both show a plunge in home sales reflecting the mayhem caused by the coronavirus crisis. It’s a taste of things to come.
The two sources relate to sales in slightly different periods, but it doesn’t change the overall picture.
The figures from the notaries relate to sales witnessed by them in March, whilst the figures from the INE relate to sales inscribed in the Land Register in March (by Land Registrars), but which took place in the proceeding one to three months. The notaries’ figures are more timely, but the INE’s figures provide more detail, like a regional breakdown.
Spanish home sales according to the notaries – March 2020
Home sales witnessed by Spanish notaries were down an annualised 37.5% in March to 32,332 transactions, as illustrated in the following chart.
The coronavirus pandemic took Spain by surprise in mid-March. School closure and lockdown started on the 16th of March, when it became almost impossible to visit a notary to complete a property transaction. So these figures show what happened with half a month of lockdown, and some unease in the market leading up to the lockdown.
But the 12-month moving rolling sales number shows that the Spanish property market was already running out of steam before the disease struck (next chart).
Spanish home sales according to the INE – March 2020
Figures from the INE, based on sales registered by the Association of Spanish Land Registrars, show inscriptions in the Land Registry down 18% to 34,806, including subsidised housing, known as VPO. Excluding VPO the free market was down 17% to 31,750.
The decline was partly because business was suspended for half the month, and partly due to a declining trend in sales in the preceding months. Just like the notaries’ figures, the 12-month rolling sales figure reveals a clear downward trend before Covid-19 came to town.
The damage was quite evenly spread between new home sales and resales.
Spanish home sales by selected region – March 2020
The regional picture looking at areas of interest to foreign buyers shows nowhere is escaping the bloodbath. The the smallest drop in Murcia, home of the Costa Calida, and a bunch of golf resorts, many of them once belonging to a developer called Polaris World. The biggest decline was in Malaga province, home to the Costa del Sol and lots of new developments pitched at foreign buyers who won’t be back in the market for at least a few months, at least whilst travel restrictions remain in place.
These latest figures show how the Spanish residential property market was already looking a bit sickly before the arrival of Covid-19 from China, with home-made headwinds like political hostility, high-transaction costs, and a lack of transparency already dragging the market down. Maybe this makes Spain more vulnerable to a threat like Covid-19, in the same way that some groups of people are more vulnerable to the disease because of age or underlying health problems. It might make it harder to recover from the shock of the disease and lockdown when recovery time comes, which it will. But for now, expect sales figures in the next month or two to be even worse as a result of the lockdown, and it will take many months to see how the market deals with the economic crisis to come.
Spanish home sales figures come from two official sources: 1) The Association of Spanish Notaries based on sales witnessed by them in the month, and 2) The Institute of National Statistics (INE) based on sales inscribed in the Land Register by the Association of Spanish Land Registrars.