Sales of property in Spain have increased for the first time since February 2011 with the government’s reduction on VAT credited with helping to boost the industry.
There were 25,020 Spanish home sales in August, up 7% over the same month last year, and 4% on the previous month, according to the data.
But according to Spanish property expert Mark Stucklin it is too early to talk of a recovery. He pointed out that the rise came entirely from the sale of new homes, a result of the 50% reduction in VAT on new homes which is in place until the end of this year.
He said it was better to see it as a welcome trend that shows the bottom of the market has probably been reached. He also added that VAT goes up to a new rate of 10% in 2013 and that could have a negative impact on the residential market.
There has been no increase in transactions for resale property. ‘I don’t think it signals the start of a heroic housing market recovery. However, I do see it as further evidence that the market has found a floor. My guess is the market will stay near this floor for quite some time,’ he explained.
The bottom in Spanish house prices won’t be reached until Spain exits the Euro and adopts the Peseta, which won’t happen until 2015. There is no way that the floor in house prices has been reached already. Property in Spain still remains well overpriced given that the economy is in meltdown and the unemployment rate will eventually rise to 50%. Sentiment in property in Spain has completely turned negative and this together with the steadily deteriorating economy means that house prices will continue falling for another five years at least.