NOTARIES: Home sales up 11pc in January, prices flat

Home sales were up 11.2% to 38,953 in January, and house prices barely changed at 1,363 €/m2, a decline of just 0.4% compared to last year, show the latest figures in the monthly housing market report from the Spanish Notaries’ Association.

Seasonally adjusted, the increase in home sales was 7% in January. Flat sales were up 9.2%, new flat sales up 11.8%, and single-family home sales up 19.6%.

New mortgage lending was up 7% to 25,488 new loans paid out in January. The average loan value was €169,722, up 5.5% in a year.

As the following charts illustrate, homes sales have steadily increased over the last five years and are now above the level of 2009 but still 30% lower than 2007, whilst house prices have also been recovering gradually over the same period, but are also still down by around 30% peak-to-present.

Why has it taken more than a decade for the Spanish property market to recover just 70% of its former glory?

On the one hand the boom was not glorious, it was insane. There is no healthy comparison to those years, and the market today is in better shape than it was then, even though many Spaniards today, especially young families, are excluded from the market by regressive taxes and high transaction costs, not to mention tight lending criteria.

On the other the Spanish Government and banking system tried to avoid facing up to the problem when the real estate bubble burst, which just dragged out the pain for many years longer than necessary. But it looks like the worst of it is now definitely behind us.