Notaries: Sales Of Second-Hand Homes Reactivate RE Market

18 August 2015 – Cinco Días

The General Council of Notaries has published its report for the real estate market in Q2 2015 – it shows an improvement in sales and a recovery in prices. Specifically, the notaries’ information, which is based on deeds included in the registries, shows that 37,641 homes were sold in Spain in June 2015, an increase of 19.4% YoY (14.4% if we correct for the effects of seasonality), of which 30,008 were flats and 7,633 were houses, with those segments experiencing YoY rises of 15.7% and 14.5%, respectively.

The most striking data to emerge from the statistics prepared by the notaries is the significant volume of second-hand home sales, compared with the lack of new home sales. 83% of the properties sold during the quarter were used homes. The strong demand (in the second-hand segment) meant that prices stopped falling at the end of Q1 2015 and actually rose for three consecutive months (by 1.9%, 1.2% and 0.4%, respectively), but by significantly less than the figures reported by INE for the period from January to March.

Exactly the opposite happened in the case of new builds. Sales in June amounted to just 3,558 (9.4% of the total), which undoubtedly compromises the Government’s plans to reduce the huge stock of unsold new homes (which stands at 535,734 properties, according to the most recent data from the Ministry of Development) and may force it to use some of those homes for other purposes, such as for social housing, in line with the demands being made by certain social organisations. (…).

The weak demand for new homes has had an inevitable impact on prices, which have continued to fall. In June, they dropped by 1.8% YoY and with the exception of April 2015 (when they rose by 5.3%), they continued to decrease throughout the quarter. The decrease in the price of new homes and the incipient rise in second-hand prices has meant that the general index, which measures the evolution in the prices of all types of homes, recorded a 0.3% decrease in June. That figure contrasts with the information provided by INE in its House Price Index for Q1 2015 (which reported an average increase of 1.5% during the first quarter) and then only a partial improvement.

In this context, the General Council of Notaries states that these figures “continue to show that the Spanish real estate market is stabilising and sales are recovering”. The recovery of the mortgage sector, which began in the first half of 2015, is going to play a key role in the consolidation of this trend. Mortgages granted for the purchase of properties increased by 32.4% YoY in June (to 17,508 loans), due to both an increase in the volume of mortgages granted to purchase homes (+32.4%), as well as a rise in the number of mortgages granted for the acquisition of other properties (+39.7%).

Meanwhile, the average amount loaned for property purchases was €130,343 (+5.2%). The average amount loaned to acquire a home was €121,445 (+4.6%), whilst the average mortgage for the purchase of other types of properties was €221,620 (+5.1%).

Finally, house sales increased in every autonomous region during Q2 2015, with Madrid and Cataluña leading the rise. (…).

Original story: Cinco Días (by Carlos Molina)

Translation: Carmel Drake