The latest home sales figures from the National Institute of Statistics (INE), and the Association of Spanish Notaries, both show a dramatic decline in transactions in April, as expected in the coronavirus lockdown period.
The two sources relate to sales in slightly different periods, but it doesn’t change the overall picture. See the blue box at the bottom of the page for an explanation of the difference between these data sources.
Spanish home sales in April 2020, according to the Association of Spanish Notaries
Sales were down an annualised 71.3% to 14,459 transactions, including subsidised housing known as VPO where prices and ownership come with restrictions. Looking at just the free market sales were down 71.8%, with new home sales down 62.5% and resales down 72.8%.
The notaries also publish house price data every month. They reveal that, despite the plunge in sales, house prices were up 3.3% to 1,464€/m2, with single family homes up 9% and flats up 2.5%. Free market apartment prices were up 2.3%, with resales up 1.1% to 1,608€/m, and new homes up 2.5% to 2,067€
As far as mortgages go, new residential loans were down 57.2% to 10,587, whilst the average new mortgage loan value was up 2.2% to 136,649€.
Spain was in lockdown throughout all of April, with one of the strictest lockdown regimes in the world, so the only surprise is that sales witnessed by notaries in the month were only down 70%. Despite the virtual house arrest imposed on the country, people still found a way to visit a notary’s office and complete almost 14,500 home sales in the month. I would have expected the decline to be close to 100%. Perhaps the lockdown wasn’t as harsh in reality as it looked on paper.
The lockdown had an obvious and expected impact on the market in April, but if you look at the 12-month rolling average you can see the downward trend had started before the Covid-19 crisis hit the market. The Spanish property market was already running out of steam in the face of increasing headwinds, some of them home-made. The coronavirus pandemic just made the situation much worse.
Spanish homes sales recorded in April 2020, according to the Statistics Office
Figures from the National Institute of Statistics (INE), based on sales registered by the Association of Spanish Land Registrars, show inscriptions in the Land Registry down 39% to 25,042, including subsidised housing, known as VPO. Excluding VPO the free market was down 38% to 20,603 home sales inscribed. New home sales were down 42% to 4,439, and resales down 38% to 20,603 residential property transactions.
Looking at selected regions of interest for foreign investors, all areas were down heavily, but some much more than others. For example, sales were ‘only’ down 27% in the Balearic Islands, whilst in the Canary Islands there were down 52%, and 65% in Tenerife. Why the big difference in archipelagos over exactly the same period? I don’t know.
But we can see heavy falls above the national average in the holiday-home hotspots of Malaga / Costa del Sol (-46%) and Alicante / Costa Blanca (-40%). In this picture the big cities of Barcelona (-29%) and Madrid (-35%) fared comparatively well.
There is nothing surprising about these figures given the economic lockdown in force throughout April. If anything, the declines were less than expected. The big question is the extent of the underlying damage to the Spanish economy and housing market. Can the market recover all the ground it lost, and how long will it take? There are some positive signs to suggest the recovery will be stronger than the pessimists like me expect, but we won’t be able to answer this question for months to come. There might be an immediate bounce in sales as pent up demand hits the market, followed by a decline in the second half of the year as the economic crisis starts to bite, assuming the economy goes into recession or worse thanks to the virus and, perhaps more damaging, the government response. It’s still too early to say, and we have to keep looking at the monthly numbers until a clearer picture emerges.