Spanish Property Sales Jump by 8.8%

August 21, 2014 No Comments

Spanish HouseSpain’s National Statistics Institute has released data showing that residential property sales surged 8.8% year-on-year in June of 2014.

The year-on-year boost was the fourth consecutive monthly rise in an upswing that began in March this year and shows no sign of stopping – though it has slowed compared with march, which saw a 22% increase.

After 10 consecutive months of year-on-year declines, Spanish commentators are starting to wonder out loud whether the bottom has been reached or even if the market in Spanish real estate is starting to rise again.

The increase is largely due to sales of existing homes; sales of new homes actually fell 3% year-on-year in June.

The boom isn’t evenly distributed, either. Valencia saw the highest number of home sales, followed by the Canary Islands and the Balearics, indicating a preference for holiday and resort properties. However the sharpest increases in sales actually occurred in Madrid, Extremadura and Navarra, which showed increases of 30.4%, 25.7% and 19.3% respectively.

The largest decreases occurred in Castilla-La Mancha, La Rioja and Castilla y Leon.

The figures come as a new report from real estate consultancy Aguirre Newman showed that sales in the traditional overseas buyer’s hotspot, the Costa del Sol, had been strong this year. Overseas buyers regard property in the area as a bargain, according to the report.

One reason why foreign buyers are pumping up the Spanish real estate market is that they are drawn from a global pool of individuals with sufficient wealth for discretionary property purchases: the Aguirre Newman report said that 90% of foreign buyers required no financing to make their purchases, while local demand suffers from lack of mortgage choice.

Buoyed by the news, there was a slight increase in the number of new developments being started on the Costa del Sol, according to the report. Four new developments were begun in 2013, while not one was begun in the preceding three years.

However, the picture isn’t rosy all over. Look closer, and the simple narrative that says the Spanish property market is back on the up begins to crumble. The number of new homes for sale fell by 18% in 2013, and 30% of new homes on the coast remain unsold. There’s more bad news on the price front: the average new flat for sale on the Costa del Sol is 127 square metres, with two bedrooms, and sells for €196, 956. The average single family home is 279 square metres and €393, 520. That shows prices have fallen, by 5.7% for flats and 9.7% for houses, in a year.

The market on the Costa del Sol is likely to divide – good quality properties close to services and amenities are forecast to stabilize over the coming year, but properties in less attractive locations will continue to fall. The recovery this year will be patchy, localised and largely fuelled by foreign money. That’s the bad news – especially for Spaniards. The good news? Real estate investors see Spanish property as a bargain, which means they’re foreseeing a future in which the value of the properties they’re buying now will be greater. The day when the Spanish market comes out of the long tunnel of the post-2008 crash isn’t here yet, but investors are already looing ahesd to the light.

Tags: Spain

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Spanish Property Sales Jump by 8.8%

Spain’s National Statistics Institute has released data showing that residential property sales surged 8.8% year-on-year in June of 2014....