As expected, the Spanish home sales figures for March look great compared to last year, but they also look good compared to 2019, suggesting that the recovery might be more than a flattering comparison with the depressed months of lockdown.
As illustrated by the chart above, there were 59,692 home sales recorded by the Association of Spanish Notaries in March, up 84% year-on-year, and 47,332 sales inscribed in the land registry, according to the National Institute of Statistics (INE), up 36%. See bottom for more detail on the difference between the two sources.
The next chart shows the year-on-year change in sales figures from both sources. You can see how sales recovered over the summer of 2020 to somewhere near the levels of the previous year, before taking off in March, as the base period starts to coincide with the Covid-19 lockdown months last year.
Comparing sales this March, when life was more normal, with sales last March, when the whole world was confined to barracks, gives a distorted result that should be interpreted with caution. The 84% increase we see in the figures from the notaries doesn’t mean the market is booming.
As I wrote last month, “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.” I was right about the rosy figures, but underestimated how rosy they might be.
However, if you compare March sales to 2019, long before anyone had heard of Covid-19, we still see an increase of 15% in the notary figures, and 10% in the INE figures, as illustrated in the next chart.
Increasing sales compared to 2019 is an encouraging sign. For one thing, it reveals more than just a flattering comparison with a depressed base period. More than that, it suggests the market might have strong enough foundations to recover from the coronavirus pandemic without permanent scarring.
On the other hand, there may still be some pent-up demand around from last year making the picture look more positive than it is, and the pandemic is still a big menace. I also worry there is an economic crisis lurking in our path like an iceberg, which we won’t really know about until we hit it. The Spanish macro figures like GDP, public debt, the deficit, and unemployment are all very ugly, with one of the worst economic outlooks in Europe. So plenty to worry about, but the March figures are reassuring nonetheless.
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.