The Spanish housing market was more or less the same size in February as it was a year before, just before the coronavirus struck.
There were 44,833 home sales recorded by the Association of Spanish Notaries in February, up 1.1% year-on-year, and 43,185 sales inscribed in the land registry, according to the National Institute of Statistics (INE), down 4.3%. See below for more detail on the difference between the two sources.
The following chart showing the annualised change in monthly sales from the two sources clearly illustrates how sales plunged in March and April last year as the Covid-19 pandemic took hold before recovering towards levels seen the previous year, though sales took a dip again in January of this year.
Looking at sales over a longer time-frame you can see how Covid hit sales badly, but not as badly as the Spanish property crash.
The Spanish property market is holding up better than I expected given the state of the Spanish economy and reduction in foreign buyers caused by Covid-related travel restrictions. The data suggests that foreign demand is down by 20%, which should have reduced sales by something between 2% and 4% before even considering the impact of Covid on local demand.
The next few months should deliver some deceptively rosy figures as sales are compared to the lockdown months of last year. I expect to see sales up between 20% and 50% in March, April and May, but the increases won’t be genuine.
The INE also provide a breakdown of sales by region, and looking at the areas of most interest to foreign investors it’s a mixed picture with some provinces like Malaga (home to the Costa del Sol) up by 10%, whilst Alicante (Costa Blanca) was down 12%, and the Canaries and Balearics down 15% and 19% respectively. I’ll look at the recent trend in these regions in a separate article.
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.