Spain House Prices and Sales Stabilising

Released on Tuesday, National Statistics Institute data showed the number of houses sold in Spain fell 8.2 percent in August, after rising for the previous three months.

On a yearly basis sales were down for the 20 th consecutive month. Here we see what is called by market analysts 'divergence' – where there is a discrepancy in the market direction shown by two indicators. Often such a technical anomaly is indicative of an imminent trend change.

The report went on to state that the year-on year volume drop of 9.9% in August (34,019 homes sold) compared with a year-on-year decline of 20.3 percent in July, and a record 47.6 percent drop in April. In other words the rate of annual volume decline is slowing. Of course making predictions is difficult, especially about the future. However it may well be that, now into the last quarter of the year, we will see sales volume stabilise, judging by these data points.

On Thursday a Spanish Housing Ministry reported annual house prices also fell – by 7.8 percent in the third quarter, up slightly from a record 8.2 percent fall in the second. Another survey by the private surveyors Tinsa came in with an 8.3 percent year-on-year fall in September compared to a 8.9 percent fall in August.

However the SHM also reported that the drop between quarters was much less, 0.9 percent compared to 1.9 percent last time. Once again, after steep falls, prices are levelling off, with a drop of under 3% over the past 6 months.

A recent poll showed that Spanish and foreign-based economists expect prices to fall on average to fall 32 percent from their 2007 peak. However, in markets, expectation is often the mother of disappointment. The global slump has lead to a collapse in new developments in Spain, meaning that supply of new homes could tighten going forward. Coupled with the divergence noted earlier in the article we could easily see Spanish property prices recovering as we move into the new year.

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