Loan levels and house sales in Spain for November


Data for November suggest the recovery continues in Spain both in terms of house sales and mortgages in Spain granted within the month but the recovery is slow and lacking in some momentum in certain areas.

House sales

House sales which are reported on by two key bodies in Spain, this being the INE and the Notary offices both showed continuing growth in November.

Growth as reported by the INE showed the sale of homes in Spain grew by 13.7% when assessing it against November of the previous year. The INE takes this data from the land registry offices so the data is always a little behind the actual sales made within the Month but year on year is still relevant.

Whilst up against November the previous year, and up from October of 2015, the level of sales was the same as October 2014 showing that whilst looking at seasonal monthly trends the market is still moving in the right direction there is no ongoing and sustained increase each month of each year.

The increase of sales of dwellings in Spain from October to November of 2015 was 5.3%, the last two years have shown decreases between October to November. Only 2011 in the last 5 years has shown a large increase due to tax breaks finishing at the end of 2011 and buyers in Spain rushing to complete before this happened. Little can be read into the November increase over October as there has been no real trend over the last 5 years.

Types of sales

56.3% of all sales within the month were for dwellings which falls within the normal split seen in Spain between properties bought for homes versus other uses. Of the sales of homes 28.7k were resales and only 5.6k new builds. New build sales have struggled throughout 2015 and have held back the level of overall yearly increases by quite some way. Despite improvements to the mortgage offerings for new builds often made by the Bank who supported the build sales lag behind.

Regional variations

Regionally all bar two regions Galicia and Navarra more homes were registered with new owners at land registry in November over November of the previous year. Best performers in Spain included the more traditional second home buying areas.

Notary Data

Actual sales recorded at Notary in November provided a mixed picture.

The number of sales reached 34,918 and was the 11 month of continuous growth. November showed an increase of 7.3% over October but this fell to three points when taking into account seasonal adjustments. The figures showed that whilst growth continued, the rate of growth slowed in comparison to previous months. Sales levels remain well below pre- crisis levels.

Average price per meter square for property sold was € 1.219 in the month a slight annual decline of 1.1% after two months of average price increases.

Apartment sales improved in November mainly due to the sale of free properties. Resales were up 12.2% and new builds, in line with reporting from land registry, was down 18.6% which was the 19th consecutive month of a downward trend in this sector. This implies developers have either got their pricing all wrong or are not developing the right properties in the right places.

Mortgages in Spain.

Mortgage levels in Spain continue to rise in line with the increases in house sales.

From the INE in November loans for the purchase of a home, registered at land registry, were 19,247 up 16.4% when compared to the previous year. Capital lent was also up, as was average loan size.

When comparing levels to the previous month of the same year however November fell away in comparison to October with capital lent and average loan size dropping by 4.3% and 4.5% respectively. Whilst yet again, showing that there is not an ongoing and continuing increase in new loans, never the less this trend of a drop in business between October to November was in line with what has been seen over the last 5 years.

Variable versus fixed rate interest

90.7% of all loans completed on a variable rate basis yet another month where, whilst a small change, the mix of variable to fixed rate product types taken is changing in favor of fixing the interest for a prolonged period of time.The 12 month Euribor remained the key index used by the Banks when offering variable rate products.

Average interest rates fell by 6.6% in comparison to last year and were recorded at 3.26%. Given how low the variable rates are, this level of cost will have been affected by higher but long term more stable fixed rates.

Loan data across the regions

Regionally in the month the Balearics saw a drop in loans granted, falling away by 28% from the previous month, this region of Spain however remains year on year the star performer having an increase of 68.7% annually in the level of capital lent and an increase of 36.8% against number of loans. Murcia also saw a large drop in the month but remained ahead for the year.

Numbers of loans in the Canary Islands increased in November but capital lent fell as the average loan size took a nose dive within the month.

Other coastal resorts have preformed reasonably well both month on month and annually and Andalucía, Madrid and Catalonia remain the three absolute biggest regions when looking at both number of new loans and capital lent.

Loans signed within the month

According to the Notary offices, who take data on loans, as they do with house sales from actual sales signed within the month showed an increase in new loans of 7.3% in November in line with new house sale increases. 25,681 new loans were constituted within the month for the purpose of buying a home, seasonally adjusted the growth was a less modest increase of 2.4% the lowest gain in 18 months.

Average loan size was well above that reported by land registry at 144.223 up 5.5 on the same month of the previous year.

After one month in September of more new loans being constituted than being redeemed we have now seen two months of net outflows demonstrating the Spanish Banks have a long way to go before their mortgage books start to build again.

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