The Eurozone debt crisis has stymied the growth of many regional property markets, and Spain’s real estate sector has seen no small amount of adversity. To help, Spain reduced the VAT by 50% on new property purchases and the discount has boosted sales. Experts say the jump is by no means a sign of recovery, particularly considering there hasn’t been any increase in resale property transactions. Some areas do better than others in the country, though, and prime properties in popular locations have no problem selling. While more properties may be moving thanks to the VAT reductions, realtors note that the increased sales have not improved price points. For more on this continue reading the following article from Property Wire.
Sales of property in Spain have increased for the first time since February 2011 with the government’s reduction on VAT credited with helping to boost the industry.
There were 25,020 Spanish home sales in August, up 7% over the same month last year, and 4% on the previous month, according to the data.
But according to Spanish property expert Mark Stucklin it is too early to talk of a recovery. He pointed out that the rise came entirely from the sale of new homes, a result of the 50% reduction in VAT on new homes which is in place until the end of this year.
He said it was better to see it as a welcome trend that shows the bottom of the market has probably been reached. He also added that VAT goes up to a new rate of 10% in 2013 and that could have a negative impact on the residential market.
There has been no increase in transactions for resale property. ‘I don’t think it signals the start of a heroic housing market recovery. However, I do see it as further evidence that the market has found a floor. My guess is the market will stay near this floor for quite some time,’ he explained.
What is happening in the market depends on where you are, according to Marc Pritchard, sales and marketing manager at Taylor Wimpey España which has new homes for sale in Mallorca. ‘In terms of new build property sales, there are only very few new developments around for buyers to actually snap up and we are literally the only developer building right now,’ he said.
‘In my opinion, when it comes to previously owned homes, there are bank owned properties which are new but could be classified as second hand because they have taken them on from property developers,’ he explained.
He pointed out that as one of the most popular Balearic Islands, Mallorca has seen an overall steady increase in property prices according to the third quarter Spanish House Price Index report from Spain's largest English language property portal, Kyero.
‘Top properties in prime locations do sell at the right price in Mallorca. Prices are stable on the island and it's a resilient market with a good reputation,’ said Pritchard. ‘One thing to note is that the German market is definitely back. We have certainly seen much more interest from German buyers, probably the strongest in 10 years, on Mallorca. Last month 21% of our sales came from German buyers,’ he added.
Meanwhile there is not much sign of prices improving in the Spanish housing market. House prices have more than halved since they peaked in 2007, according to a report by the University of Pompeu Fabra in Barcelona and property company Tecnocasa.
Based on a sample of transaction prices in Spanish cities including Barcelona, Madrid, Malaga, Seville and Valencia, the study found that house prices have fallen 53% since the end of 2006, from €3,500 per square meter to €1,633 per square meter.
According to José García-Montalvo, the professor in charge of the study, the research is based on real transaction prices, not valuations or estimates like other data.
‘I suspect these figures are closer to the truth than any of the house price figures published by the government, notaries, or National Institute of Statistics, which all base their figures on valuations done by people who don’t know the real market price,’ said Stucklin.
‘For example, the latest data published by the Notaries would have us believe that house prices have declined just 26.8% since the peak in late 2007, giving up only the last couple of years of gains made at the tail end of the boom. Bearing in mind the housing crash and economic situation Spain is going through, who on earth is going to take that figure seriously?’ he explained.
‘Basically everyone except official sources and some appraisal companies say that Spanish house prices are already down 40% or more. The sooner the official sources get real the better,’ he added.
This article was republished with permission from Property Wire.