Sale of ‘used’ housing suffers biggest drop so far this year

According to the Spanish National Institute for Statistics (INE) only 17,747 people managed to sell their used flats or houses in the month of August which is half the number compared to the same month last year.

The sharp fall in the housing market in Spain appears to have affected the used housing market more than new construction. Not only is it more difficult to sell a used house or flat but banks are less willing to concede mortgages for this type of housing.

However, the market for new houses and flats has also been affected and in August the sale of these fell by 37% compared to the same month in 2007 which appears to support the theory that far from being over the slump in the Spanish property market is deepening even further.

The number of mortgages conceded by banks fell by 37% in August and the amount of capital lent also fell by 42%. This is the second time that the average amount lent for mortgages fell – the average mortgage in Spain is now 137,657 euros which is an important indicator that property prices are falling in Spain.

The crash has also affected the number of building permits issued to architects for the commencement of new buildings. These have dropped by 59% (to just over 199,000). This is further negative news for the Spanish housing market because these permits are seen as an indicator for the future evolution of the sector.

It is estimated that there are currently around 650,000 unsold houses or flats on the market. This figure was confirmed by Beatriz Corredor, the Housing Minister, in the Spanish parliament yesterday. She said that it should take around a year and a half for the number of unsold properties to be ‘absorbed’ by the property market. She added that the solution was in the hands of property promoters who needed to adjust their profit margins in accordance with what she called ‘the logic of economics’ .