Spanish property sales remain poor heading into the final period of the year as new figures show that demand is on the wane while the number of homes for sale continues to grow.
There were just 22,065 home sales in September (excluding social housing), 30.5% down on the same month last year and 62% down on September 2007, according to the latest figures from the National Institute of Statistics (INE).
Monthly sales this year since March have been the lowest since the crisis began, as illustrated by the chart above. The positive start looks like a dead-cat-bounce.
On a year-to-date basis sales in 2011 are 20% below last year, and 56% below 2007. The big question is can it get any worse in 2012? Some experts think so.
Sales this year have fallen by as much as 40% in August, with an average annualised fall of 29% each month since March. The market is shrinking fast, a clear sign that prices are still too high.
All this at a time when Spain is saddled with a monumental glut of homes for sale, not to mention unemployment of 22% and rising. More than 40% of young Spanish adults are out of work. Demographics are also starting to blow against the Spanish economy.
Unless the next Government takes radical steps to liberalise the economy, boost employment, and force banks to stop keeping property prices artificially high, it’s hard to see a way out of this mire.
What about holiday homes? Here the situation is a bit different because demand is internationally diversified, at least in some areas. Some quality segments of the holiday-home market will recover before the overall housing market. That said, this year and next year will be very tough.