Monday, 14 October 2013

Property sales and Transfers Spain

The August data on transfer of property rights from the INE in Spain was released today.
What does the INE report include
The data issued by the INE is an overview taken from land registry in Spain, of the total amount of properties in Spain transferred during the month of August and includes data relating this to the previous year and the previous month. The information whilst showing August could relate to actual sales in the last couple of months because of the time lag between Notary and registration of the property transfer.
 The information in the monthly report contains the total transfer of property rights not just the buying of residential property in Spain.
The data within the report covers all areas of transfers including, Bank foreclosures, so where a mortgagee has defaulted on their Spanish Mortgage. The data also includes the transfer of commercial property as well as inherited property and land purchases. One of largest groupings making up one third of the total includes bank repossessions where the Bank has concluded the litigation, the Subasta date has passed without a buyer being found, and the Bank has purchased the property from the courts.
Purchases of homes in Spain
House sales, so those properties actually bought for residential or holiday use, saw large drops in August in comparison to August of last year and between July and August of this year.
 Sales of residential property in Spain fell in August 2013 by 15.4% when viewed against the same month of 2012. Possibly more concerning is that the data shows that house sales also fell between July 2013 and August 2013 by 8.4% and showed the biggest drop between these two months since the crisis began some 5 or 6 years ago.
New builds lagged heavily behind resale’s a trend that has continued since the withdrawal of tax breaks on new builds at the end of December 2012. During 2012 the government in Spain, to help kick start the sale of new build property, dropped IVA on the purchase of new builds from 7% to 4%. In January 2013 not only was this reduction withdrawn but in fact a new IVA level of 10% was implemented.
Because transfer of property data comes from the Land registry and does not therefore necessarily reflect actual sales within the month they happened, January and February 2013 appeared to show an improvement in overall house sales. This data was in fact a reflection of the higher level of sales made in December 2012 and November 2012 as people rushed to beat the tax increase.
Is there any good news
Not really. Year on year sales data seems to indicate that sales are up from 2012. This however is not necessarily a true reflection of what is happening. Firstly the figures include sales that actually happened at the back end of 2012 and secondly one of the groups showing an increase by 11.4% is the group that includes Banks taking over properties they have repossessed.
Regional differences
One stark point coming from Augusts report is that the coastal areas traditionally the first port of call for non residents buying in Spain are holding up much better than the other areas of Spain where property is more traditionally bought by the indigenous population.

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