Author: José Luís Aranda

Source: El País

The economic recovery following the harshest months of the pandemic is providing a strong tailwind to the real estate market. Month after month, it climbs to new records and shows figures that Spain hasn’t seen since the real estate boom of the early 2000s. This Wednesday, the National Institute of Statistics (INE) reported that last July, 50,258 home sales were registered across Spain. This is an increase of just 2,000 transactions compared to June, but it marks the milestone of surpassing 50,000, a barrier that the Spanish real estate sector hadn’t crossed since April 2008.

The situation back then was very different: Spain was coming off years of intense growth and was heading toward the burst of a real estate bubble that devastated the sector for years. Now, it’s the exit from a crisis, in this case caused by an external factor (the pandemic), that is driving a rebound in demand, which had been stagnant for months. This makes comparison with the previous year almost useless: the figures published this Wednesday by the INE indicate that this July, 53.5% more houses were sold than in July 2020, but at that time, we were barely experiencing the first stages of deconfinement and what was called the “new normal.” Cumulatively, from January to July of this year, there are 34.5% more transactions than in the same period last year.

A comparison with 2019 is more relevant. Compared to July two years ago, the market grew by 4%. Considering that last year in the same month, it had dropped by more than 32%, it seems there is still a lot of room to recover everything that was lost. The notarial statistics, which are considered a leading indicator of the path set by the INE, also point in the same direction. These notarial statistics are often one to two months out of sync since they are based on property records. Notaries have continued to point to an intense recovery of the market throughout last summer.

The duration of the pandemic crisis has triggered mortgage foreclosures.

For Susana Rodríguez, general business director at the consulting firm Savills Aguirre Newman, July’s figure “is a very positive sign that continues the trend started in 2013, except for the Covid-19 break, and positions the real estate sector as one of the engines of the Spanish economy.”

By types of housing, the INE data shows that in July, the sale of free-market housing (58%) increased more in interannual terms than that of subsidized housing (15.5%). Second-hand housing (56.9%) also rose more than new builds (40.2%). In fact, in absolute terms, the record is supported by the sale of used homes (40,748), while newly built houses (9,510) are slightly below the peaks reached by this segment a few months ago. This is partly a sign of market normalization since in the Spanish real estate market, the most common transaction is the sale of free-market second-hand homes. However, Rodríguez believes it indicates a certain underlying imbalance. “The distribution of sales between new builds and second-hand homes remains abnormal, with new builds accounting for only 20% of total sales,” the expert says, noting that “a more balanced distribution between supply and demand is necessary.”

Decline in the Basque Country

By autonomous communities, it is noteworthy that despite the intense growth in July, one region saw a decrease compared to 2020: in the Basque Country, there were 6.5% fewer transactions than twelve months ago. In all other regions, sales increased, although with significant differences ranging from Extremadura’s growth of 13.3% to Cantabria’s 79.1%. In terms of the number of transactions, Andalusia stood out as usual for being the most populous, with 10,598 sales. Following closely were Catalonia (7,815 transactions), Madrid (7,278), and the Valencian Community (7,226).

The statistics published this Wednesday provide data on all property transactions in addition to housing. Including other types of rural or urban properties (from plots to commercial premises or parking spaces), Spain recorded 100,540 sales in July, 41.2% more than in the same month in 2020. Regarding other types of property transfers, exchanges increased by almost 48%, inheritances by 20.2%, and donations by 2%.