Spanish Property: Sales and Mortgage Activity on the Increase
Housing-Market / Spain Apr 20, 2015 - 09:46 PM GMTBy: Submissions
Hopwood House writes: Sales of Spanish residential properties in February were up 15.5% on the previous year, according to the latest official figures. With 29,714 transactions registered across the month, February became the 11th month out of the past 12 to see a year-on-year increase in property sales.
Overall, February's activity has brought the cumulative 12-month total number of property sales in Spain to 326,143. Compared to the low level seen just before this period began, in February 2014, the 12-month running total has increased by 11.2%. A continued increase is expected by many prominent forecasters, though the figure is unlikely to approach the peak levels seen in 2007-2008 when the 12-month total sometimes exceeded 700,000.
The increase in sales may be supported by a greater willingness on the part of lenders to help finance property purchases. Mortgage activity in Spain has been increasing, and in February the number of mortgage agreements also registered a year-on-year increase, and this increase was greater than the rise in property sales rather than simply in step with it. Spain's notary offices saw 11,229 mortgage agreements signed in total for the residential sector – an 18.5% rise compared to the same month in 2014.
The average capital loaned in relation to a residential mortgage, however, fell by 1.6% year-on-year. This brought the total average Spanish residential mortgage value to 108,285 euros and was the first decrease seen in the average mortgage loan since August of last year. The drop in mortgage values does, however, fit recent trends. While a greater number of mortgages are being granted, the average percentage of a property's value paid for through a mortgage is decreasing. The typical mortgage-assisted property purchase in February involved a loan of 75.6% of the property's value, compared to 86% in 2007.
Overall, of February's 29,714 residential property sales, 42.3% were purchased with the help of a mortgage. A year and a half ago, less than 30% of properties were bought with mortgage funds covering at least part of the purchase price. However, compared to just before the global recession, the figure has fallen significantly. In the pre-crisis Spain of 2007, nearly 90% of residential properties purchased were financed at least partially by a mortgage.
Second hand properties noticeably outsold new builds in February, and indeed this situation has been very much the norm in Spain recently. Sales of new-build properties have been consistently increasing, and in February were up by 50.4% compared to 2014. Overall, this meant that second hand properties made up 72.7% of all sales activity in February with 21,613 existing properties sold.
February's increase in sales activity was evident across most Spanish regions. Some of the most significant increases were seen in Catalonia (23%), Madrid (28%) and, in particular, Aragon (49%). The only regions in which sales activity fell compared to the previous year were Murcia, Navarra and the Canaries.
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