Spanish Property Sales, Consumer Prices and Economy News
August 13th, 2010
This week has seen Spain’s National Institute of Statistics release a series of figures relating to house sales, the economy and consumer prices in Spain, with positive, if unspectacular, results. The figures start with the news that property sales in Spain rose by 10.7 percent in the first six months of 2010.
The first six months of the year was capped by the month of June in which sales rose by seven percent when compared with the same month in 2009. 37,297 different operations were carried out in June, even though the increase was slightly below that of the other months in the period.
The vast majority of homes sold in June (90 percent) had no price or resale restrictions, while 10 percent were “protected” which means they are at a lower price, but cannot be resold for a specific period of time. Protected homes are constructed in Spain with the aim of allowing first time buyers to get a foothold in the housing market.
Meanwhile just over half of the total of homes sold in June had previous owners, while 48.1 percent were new constructions. That 48.1 percent reflects the problems that the Spanish construction industry has faced in recent months due to the economic crisis as it is 2.1 percent down on the same period 12 months previously.
The fact that house sales in Spain rose by less in June than in the previous five months of the year, could be good news for the industry, given that July 1 saw a 1 percent increase in sales tax to 8 percent on house sales. It had been anticipated than many prospective home buyers would try and rush through their purchases to avoid that tax increase, but that has clearly not been the case and could be good news for the recuperation of the Spanish housing sector in the second half of the year.
Further encouragement comes from news that the Spanish economy grew 0.2 percent in the second quarter over the previous quarter, according to more figures released by INE. The slow recovery followed a 0.1-percent quarter-on-quarter growth in the first quarter. However, the pace of growth was lower than the 1 percent growth registered in the euro-zone in the second quarter.
The Bank of Spain warned that “the signs of recovery will continue to be weak for a several more quarters to come” as the austerity measures and the end of government subsidies to stimulate consumption would push the economy into negative growth. Spanish Prime Minister Jose Luis Rodriguez Zapatero also admitted Tuesday admitted that “the third quarter will not be as good as the second.”
Finally, consumer prices in Spain are rising faster than at any time in the past year and a half, according to INE. Their figures show Spain’s inflation rate for June stood at 1.9 percent, 0.4 percent higher than 12 months ago and the highest in the last 18 months.
INE attributed the increase mainly to the prices of food, non-alcoholic drinks and organized travel, which usually rises at this time with the holiday season in full swing. High fuel costs took the Harmonized Consumer Price Index to a record high of 5.3 percent in June 2008, but that was the moment when prices began to decline. Spain witnessed an inflation rate of 2.4 percent in November 2008, the highest level registered until the prior month.
