Spanish used property sales return to pre-crash levels

There is no doubt that the level of activity in the Spanish residential property market has risen sharply over the last two or three years, and that the bottom of the slump following the crash almost a decade ago is now well and truly in the past, but there is some uncertainty now concerning what would be an acceptable and healthy level without reaching the excesses which led to the inevitable boom and bust cycle.

In this context Spains property registrars have this week published some relevant data which may provide a clue. During the second quarter of this year, they report, a total of 119,408 homes changed hands, of which 99,343 (or over 83 per cent) were second-hand properties. This is the highest figure for a decade in relation to used housing, indicating that in this respect the market is now as active as it was in the months leading up to the bursting of the property bubble in late 2007 and early 2008.

Is that dangerous? Is the market heading for another crash?

Probably not, because on the other side of the coin is the figure for new property sales, which between April and June was only 20,065. This represents under 20 per cent of the totals which were recorded in early 2007, indicating that speculative construction and buying is not as significant a feature of the Spanish property market as it was a decade ago.

The combined effect of these two very distinct trends for new and used properties is that the quarterly total between April and June of this year is the highest for six years, but is still only around half of the figures which were reported on a regular basis prior to 2011.

At the same time, the registrars report that during the second quarter the average mortgage loan capital reached 115,769 euros, whereas a decade ago it was over 150,000 euros, confirming that prices are not yet reaching levels which might be considered risky.

British buyers regaining confidence?

The registrars also report that during the second quarter the proportion of purchases made by non-Spanish nationals remained steady at 13.1 per cent, giving rise to approximately 15,600 sales. Among these transactions 14.9 per cent (around 2,300) concerned British buyers; an increase in comparison to the previous quarter, reversing the downward trend since the Brexit referendum; while the other leading nations represented were France (8.5%), Germany (7.8%), Belgium (6.4%), Italy (6.2%), Sweden (6.2%), Rumania (5.4%), Morocco (4.3%) and China (4.1%).

Source: Spain News Today, September 2017