Contradictory figures for home sales in August help muddy the market at a turbulent time

spanish property market home sales august 2020
Home sales went both up and down in August, reports the Spanish press

Spanish home sales in August went both up and down, reports the Spanish press. As usual, the reporting is mixing up different data sets, and leaving the public confused about the direction of the market at a turbulent.

In the last few days the Spanish press has reported that home sales went up in August by 6.8%, and down by 12.6%, as you can see in the example above. Now obviously, it can’t have done both. The press reports mix up two different data sets in headlines that overlook the difference between them, and send mixed messages that confuse the public. This careless reporting muddies the waters of the Spanish property market, making it seem even less transparent than it actually is.

As I point out almost every time I discuss Spanish home sales figures, there are two main sources of official data, 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. I explain the difference between the two sources in the blue box below.

Recently, the registrars have started publishing their data on a monthly basis, so we don’t need to wait for the INE publish more or less the same figures a month or so later.

A tale of two data sets

spanish property market home sales august 2020
Homes sales change according to notaries
spanish property market home sales august 2020
Homes sales change according to the registrars

Home sales went up in August, thanks to pent up demand

Given that the figures from the notaries are more timely, this means that Spanish home sales actually went up in August compared to the same month last year, by 6.8% to 33,201. They also report that Spanish house prices fell by 7.3% to 1,271€/m2.

But even though backward looking, the figures from the registrars are useful because they provide more detail, for example on regional sales. You can seem from the table below that the market slump has been worse in the Valencian region (-24.9%) and Catalonia (-22.5%) than Andalusia (14.2%) and the Balearics (-3.6%).

spanish property market home sales august 2020

How is it that home sales rose in August, whilst Spain is going through the deepest coronavirus crisis in all Europe, with GDP forecast to decline by 12.8% in 2020 according to the IMF (chart below)? The most likely answer is because of pent up demand that was suppressed during lockdown and delayed until August. Overall demand is on the decline, I believe, but Covid-19 disruption is distorting the distribution of sales over time.

I expect the sales reported by notaries to decline significantly in the last quarter, and the figures from the INE and registars to follow suit a few months later. There will come a point when even the headlines agree that Spanish home sales are going one way.

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