PROPERTY SALES in Spain fell for the eighth consecutive month in September with a 23.7% drop compared to a year earlier.
It’s the biggest reduction since June 2020 when Spain was just coming out of the State of Alarm due to the Covid pandemic.
44,086 home deals were completed in September, the lowest for that month since 2020 according to the National Institute of Statistics (INE) reported on Friday.
Compared to August, transactions plummeted by 10.5%, and just 18.6% of properties sold were new-builds.
The situation among the regions saw Canary Islands property sales – fall by 40.1% in September compared to a year earlier.
Extremadura (32.2%), Aragon (31.1%), Catalunya (28.8%), the Balearic Islands (27.2%), Andalucia (26.6%), the Basque Country (25.6%) and Madrid (23.8%) are also on the list of regions with the biggest falls.
Much less pronounced were the declines in Castilla-La Mancha (7.7%), Castilla y Leon (12.3%) and Asturias (13.9%).
The INE figures show that 457,424 properties have been sold in the first nine months of 2023- a decrease of 8.5% year-on-year.
The trend suggests the property market will close the year with a lower number of homes sold than in 2022, but experts are confident that more than 550,000 sales will be completed before the end of the year.
The housing market collapse is largely due to the interest rate increase from the European Central Bank (ECB), which kept the rate at 4.5% in October after several consecutive hikes to control inflation.
The real estate portal Fotocasa estimates that 60% of buyers have already been affected by the steepest rise getting mortgages since records began, and that one in four potential buyers have paused their purchases.
An important proviso in all the figures is that comparisons are being made with 2022, which broke recent records after the pent up demand caused by the Covid pandemic with 650,000 were sold- something not seen in 15 years.
“Despite the large year-on-year falls this year, the number of transactions is 19% more than in the same period in 2019,” said Francisco Iñareta from Idealista.
Maria Matos, Director of Studies at Fotocasa, added: “What is happening is not a standstill in the market, but a trend of adapting to the new situation of rising interest rates.”