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Housing market shows recovery in January after 12 months of decline
Wednesday, April 3, 2024 @ 8:49 PM

AN ONGOING slowdown in home sales in Spain showed signs of recovery in January – the last full month for which figures are available.

The National Statistics Institute (INE) revealed that the year-on-year decrease for the first month of 2024 was just 2.1%, marking an upturn since the closing months of 2023.

Figures for October showed a 11.1% annual reduction, followed by 8.7% in November, meaning numbers for January 2024 point at an increase in sales after a difficult final quarter.

To date, sales and purchases of residential property in Spain have shown year-on-year declines each month for the past 12 months, but market prices do not appear to have been affected by this trend.

Home values are continuing to rise, albeit gradually, but mortgage finance issues appear to be directly responsible for fewer purchases.

Banks are applying tougher conditions for granting new loans, and the unprecedently-sharp rise in Eurozone interest rates since late 2022 mean mortgages are far more expensive.

As Spanish variable-rate mortgages are typically reviewed annually and adjusted to the current Eurozone interest rates, known as the Euribor, this means the full impact of the hikes was not seen by every homeowner in Spain with a loan until the closing months of 2023.


Still in decline, but second-highest sales volume since recession

INE details show that a total of 54,346 homes were sold in Spain in January 2024 – a time which is traditionally an off-peak sales month in any case, with purchases tending to spike just before and during summer – compared with 55,496 residential property sales in January 2023.

But this shrinkage is in no way close to that seen at the beginning of the recession when home values and purchases tanked – in fact, INE data reveal that January 2024 accounted for the second-highest number of sales since the same month in 2009.

Last January saw the best results since that bleak time now 15 years ago – at the start of 2023, residential property purchases went up 4.9% year on year, despite the preceding few months showing early signs of a slowdown.

By February 2023, home sales were down 6.6% based on the same month the previous year – a drop which swelled to 15.6% by December, when only 36,698 properties were sold.

This means that, despite property market growth still being some way off, the increase in sales from month to month between December 2023 and January 2024 was an impressive 48.1%.

That said, a gulf normally exists between year-end and year-opening home sale figures, given that transactions started in the run-up to the festive season are often not closed until January, due to the inevitable reduction in all non-Christmas-related business activity during that time of year.




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