According to the official Land Registrar, 318,929 properties were sold during 2014, 200,065 of which were second hand properties (or resales) representing 62.7% of total sales and 118,863 (37.3%), were new properties. This implies an increase of 18.4% in second hand property sales over the previous year. Another significant finding is that for the first time in four years, the number of overall sales has increased in Spain.
So far, the trend this year seems to be the same, with an overriding number of second hand homes being sold.
The main reason for this predominance is none other than the price, up to 15% cheaper compared with the sale of a new property. The average price per square meter of a second hand home is € 1,347, whilst new housing is selling at € 1,624/m2. There is also more margin for negotiation in the case of a privately held property, especially if purchased during the boom years, as the vendor may have been waiting some considerable time to sell and is keen to offload it as soon as possible.
Taxes generated on a property sale are also another factor influencing the market. A new property sale attracts VAT at 10%, plus other additional stamp duties, whilst in the case of a resale, ITP – or transfer tax applies, which is charged by each autonomous region (based on where the property is located) on a scale of between 6 to 10%.
It is also worth mentioning that it’s easier to come by a second hand property rather than a new one, as many new homes were built in speculative areas with low demand.
In contrast, new housing is generally in the hands of banks or developers, offering preferential finance or mortgage terms, making the operation attractive, in principal, for the potential buyer. However, whilst banks are keen to offer finance for their own products, they are far less willing to do so for purchasers of privately held property, either directly or through an estate agent.
The reality is that after years of having cranes block the horizon, the supply of new homes for sale is dwindling, and in most cases unattractive. However, pundits are expecting this to change as from next year, forecasting a revival within the construction industry in 2016 of up to 100,000 new homes and total sales of new and old of 450,000 units.
Robert Edwards – LPG SPAIN Blog.