Year on year property sales in Spain have increased for five months in a row, signalling that the residential real estate market is becoming more stable.
The latest figures from Spain’s National Institute of Statistics (INE) shows that sales increased by 10% in July on an annual basis and by 9% on a quarterly basis.
The INE doesn’t break down monthly sales figures by nationality, but real estate experts point out that foreign buyers are driving the sales increase. This suggests that there is plenty of scope for further increases when local demand picks up with falling unemployment and easier mortgage lending.
Looking at sales by previous ownership, the trend towards resales continues, with new sales down 8.3% in a year, and resales up 26.8%.
Looking at sales by region, some of the biggest increases took place in the provinces of the interior, for example Cáceres saw sales increase by 87%, albeit from a low base. Sales in some coastal areas like Málaga’s Costa del Sol where foreigners tend to buy, were above the national average.
The INE data also shows that average Spanish rental prices fell 0.7% over the 12 months to the end of August. Average rents in Spain have now fallen every month since April last year.
A breakdown of the data shows that rents fell last month in 15 out of Spain’s 17 regions, but rose a fraction in Catalonia and Asturias.
Compared to house prices, rents are now in negative territory whilst house prices are rising for the first time since the first quarter of 2008, meaning that rental yields are shrinking. Falling rental yields diminish the appeal of property as an investment, however, rental yields have improved considerably since 2007, as rents have risen 10 per cent whilst house prices have fallen 33%.