From Pandemic To Home Purchase: Down 17.7% Last Year, Back To 2016 Levels

2021-02-15   |   by CusiGO

415748 houses. This is the number of homes bought in Spain last year. Sales in the first year of the coronavirus pandemic are down 17.7% from 2019, according to the National Bureau of Statistics (INE) on Monday. They are half a million (more than they have in the past two years) far behind the level of four years ago.

The market has shown signs of cooling (sales in 2019 are down 2.5% from the previous year), but without the outbreak of coronavirus, the big battle cannot be explained. In the first few months of the pandemic, the virus almost closed the market. Even with the relaxation of restrictions, it continues to have a significant impact on business, for example, the business of foreign customers, who are major customers in coastal areas and account for more than one tenth of the total market sales.

This explains why it was the autonomous region that suffered the most last year, traditionally with the heaviest burden on foreigners to buy houses. Despite the overall decline in transactions, sales in the Balearic Islands are down 23.2% from 2019. This was followed by the Valencia Community (- 22.1%) and the Canary Islands (- 21.9%). Madrid (- 21%), Navarra (- 20.9%) and Catalonia (- 19.7%). Andalusia, the largest autonomous market, was second only to Catalonia, but slightly better than Spain as a whole, down 16.3%. Estremadura (- 6.5%), Asturias (- 9%) and Cantabria (- 10.7%) are the communities where the epidemic has the least impact on home buyers.

Another trend observed last year also confirms the data released on Monday, that is, the sales performance of new employees is better than that of second-hand houses. The epidemic hit everyone, but when the new housing market fell 11.2% last year, second-hand (mostly) housing fell 19.2%. Experts usually consider several factors to explain the difference. One is that consumer preferences have changed after the pandemic. This restriction has led to a reassessment of housing in well conditioned private spaces such as balconies, balconies or garden plots, which are often better suited for newly built housing at the expense of a more central location or higher price. The second reason is that, in addition, the new project is based on a large number of pre-sale, which means that the buyer made a commitment a few months (or years) ago. This makes many customers have a certain sense of urgency at the end of the construction, need to complete the sales operation, in order to move into a new home.

The performance of free housing also improved, with a decrease of 17.3%, while that of some protected housing decreased by 22.4%. The former dominated the market to a large extent: they represented 378000 deals, while VPOS sold slightly more than 37000. That is to say, less than one in ten home buyers are protected in some form, which is related to the low activity of the government in promoting such real estate for many years.

How does the market develop? To answer this question, the statistics also provide segmented data for December. Despite the high volatility of the market, the fact is that the last month of this year did leave some reasons for optimism. 36109 registered sales transactions increased by 3.7% over the same period in 2019. That is to say, compared with the same period last year, the market ended the year with a rise. Although this figure is low and indicates that there is no rebound effect at present after the huge blow left by the virus (the collapse in May was close to 54%), it is the second month after the 1.9% growth in November. This is the best two months in 2020, with the biggest year-on-year decline (except for the 0.1% market rise in February). Since the beginning of 2019 (February to March), there has been no year-on-year growth for two consecutive months.

The data at the end of this year also showed that after the first disastrous wave of the virus, the next few times did not cause such a serious blow to the real estate industry. However, this interpretation needs to be cautious, because the statistical data of the National Bureau of statistics relies on the property records, so it records the time when the deed enters the property records, which usually has a certain gap with the transactions actually signed in a certain month. Notaries on Friday provided their annual sales figures: they are also less than $500000 (about $487000, though most people have sales records) by 2020, down more than 14% from 2019. In addition, the notary also noted a good trend in the last two months of the year, with year-on-year growth in November and December.

Back to the data of the National Bureau of statistics, the real estate transfer statistics also left a picture of the overall flow of real estate assets. That is to say, it includes not only sales but also other transactions involving the change of ownership of a particular property. Besides housing, it also includes other types of urban or rural real estate. As a result, total sales (adding houses to other properties) last year were 849670, 17.1% less than in 2019. The performance of the whole market is better than that of housing, because although the proportion of rural real estate purchase is very small (122587 in absolute value), it is only 13.1% lower than that of urban real estate.

Compared with 2019, nearly 1.7 million properties changed hands, a decrease of 17.9%. Sales are the most common way, accounting for about half of the total, but not the most painful. The statistics show that swaps (- 20.3%) and other swaps (including from land and horizontal splits to payments or foreclosures) fell by 23.2%. The number of heirs was 371398, 15.1% less than the year before the pandemic. Finally, donations (less than 50000 in absolute terms) are the only increase in 2020, up only 2.2%.