Conveyance of Spanish Houses in August

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Spanish Houses sales in August

Despite much publicized good news coming out of Spain in recent weeks, Spanish house sales in August as registered at Land registry fell with less purchasers buying in Spain.

In July 2014 the highest number of house sales in the last 12 months were sold leading to a belief the corner had been turned. In August sales of homes dropped from both July 2014 levels and when compared to August 2013.

In the last 5 years it has been normal for there to be a drop in acquisitions between the month of July to the month of August but the drop of 17.4% is the biggest drop between the months when looking back at the last 5 years from 2010 to 2014. The next worst drop month on month was in 2013 at minus 7.9% but this was off the back of an unusual increase between the months of July and August of 2.8% in 2012.

What is happening in the Spanish property buying market

The biggest driver of the drop in house sales is in the area of new builds. New properties showed a decline in sales levels when compared with August 2013 of 22.1%. When the sale of new properties is extracted from the data the level of resales was actually up by 15.2%. This is bad news for the developers and Banks many of which still hold new unsold stock built back in the boom times.

July 2014 was also the best house sale month in the last 12 months showing a sharp increase in the number of sales both from June 2014 and July 2013. This possibly abnormal increase may mean buying decisions were brought forward by some buyers and that completions were pushed through before the August holiday season having an adverse affect on the numbers in August.

It is equally possible due to holidays in Spain of those linked to legal services such as, Lawyers, Notaries and land registry, that the time taken to get completions registered at land registry was extended and that therefore we may see Septembers sale figures bounce back reflecting more accurately how many sales were made in the month rather than those that actually got sold and registered within the month.

Resale purchases why are they up

Currently in Spain it is often the case that resales reflect better value for money. Sometimes private sellers are more realistic about the sale price than the developers or Banks and resales continue to be seen by nonresident buyers as the more attractive of the two. This may partly be due to pricing, quality of the properties and the areas in which they are built and can be despite the fact Spanish Banks may offer favorable mortgage terms to help the sale. Better mortgage terms have to be assessed against the overall value of the property itself when buyers are considering buying.

It is also the case that those selling in Spain who bought property before 1994 in Spain will want to sell before the end of the current year, when under new tax guidelines, inflation relief on capital gains tax is to be removed. This will help focus sellers in such a situation on what price they need to market the property at in order to complete the sale before the end of the year. The change in tax may also have the same affect on overall sales in November and December as was the case when a 50% capital gains tax reduction finished in 2012 and the short term IVA  discount for new builds was removed.

Regional variations

Andalucía, one of the nonresident buying hotspots, was hit hard in August and was down 9.4% when compared to August of 2013. Madrid was up 19.5%, the Balearics was up 19.7% and the Canary Islands up 4%.

Cataluña which is a region popular with both residents and non residents and includes Barcelona,  was down 11.7% and may reflect a general nervousness about what could happen in this region as the region fights for independence.

Despite having less buyers in August Andalucía remained the region with the highest number of overall sales per 100,000 inhabitants.

Overview

Total house transfers in August were 47,193 this compares with the July figure of 60,556.

The highest level of transfers per Region was registered in Andalucía and was 9,149.

Of the 47,193 dwellings registered as transferred in August only 23,525 were actual sales. The other transfers were made up of Inheritance, donation, swaps and other titles. Other titles are predominantly repossessions.

In August the number of properties registered in other titles reached 12,947 and in July this year the figure was 18,251. This significant drop may also reflect the fact that the courts basically close through august so house auctions and court orders for the transfer of the property to the Bank will be lower.

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