The Latest Spanish Property News from Kyero.com

After writing about the decline of foreign property transactions, I got my wrists slapped by Luisa at Mirodali Properties.

She quite rightly pointed out that, by combining sales figures for new-build properties and resales, I had (unintentionally) distorted the actual growth rates for each province.

This is because a new-build property essentially gets 'sold' prior to construction but the sale is only recorded after construction. Hence, the growth rates of new-build completions actually reflect buying activity that is two, three or more years old.

Compare this to the sale of a resale property which is notarised within a few months of a buyer saying 'Yes, that's the house I want' and you begin to see the problem.

By combining new-build and resales growth rates, I added apples and oranges and made bananas - my apologies.

Another facet I did mention but perhaps didn't stress enough is that the figures I analysed were for foreign buyers only - not all purchases.

Here's a revised spreadsheet (keeping apples and oranges separate this time).

Luisa was absolutely spot-on - mixing numbers for new-build properties and resales is meaningless. Here's what struck me when comparing the number of resales transactions between Q2 2006 and Q2 2007:

1. Overall, resales transactions dropped by almost 20% from 145,000 to 116,000



2. Andalucia resales fell overall by 13% despite 23% more purchases by foreigners. Spanish resale purchases fell by 17%.



3. Granada province was the jewel in the crown of Andalucia showing an overall 19% increase in resales transactions - a reflection of both Spanish and foreign buying trends.



4. Apart from Granada, every other province in Andalucia recorded an overall decline in resales transactions, despite increased activity in many provinces from foreign buyers. Spanish buyers, who account for approximately 85% of all resale purchases only increased their purchasing in Granada by 14%.



5. The Canary Islands overall saw 16% more resale purchases in Q2 2007 compared to Q2 2006 - largely thanks to 73% more foreign purchases but Spanish purchases increased by 4% too.



6. The Balearic Islands also saw a healthy increase in foreign purchases - up by 18% from 817 to 960.



7. Foreign purchases now account for 15% of all resales transactions. Proportionally, more foreigners are buying in Spain than ever before - favouring the regions of:
   
   Andalucia (up from 9% to 13%)
   The Balearic Islands (up from 20% to 24%)
   The Canary Islands (up from 17% to 26%)
   Valencia (up from 23% to 26%)
   Murcia (up from 23% to 25%).
   
   (Percentages are the proportion of all purchases made by foreigners)



8. Foreign interest declined in many regions - significantly in Calatlunya and Madrid - down by 10% and 25% respectively.

In summary, it seems as though Spanish buying activity is cooling faster than foreign activity. Perhaps this is because the Spanish economy is more reliant on the construction industry than elsewhere in Europe. In essence, as the construction boom has ground to a halt, there are more unemployed construction workers with less spare cash than previously.

Martin Dell, Kyero.com

Is any property below €50,000 a cheap Spanish property? Are cheap Spanish properties only to be found at auction or as bank repossessions? How much below market value does a Spanish property need to be to be considered cheap?

Continue reading: What IS cheap Spanish property?