May House Sales

May Spanish house sale figures have been released by the INE. Notable, as expected by this writer, is the continued (but not increasingly so) depressed state of the market.

In order, however, not to paint an undesirable situation worse than it is, it is worth paying attention to the continued uptrend in total sales. This is mostly fuelled by transfers of second-hand residences which, at least on 12-month total basis, are showing a marked recovery from last spring's lows. That they fell considerably more than new sales from the beginning of the series through 2009 is probably attributable to the effects of off-plan purchases of new homes finally being delivered and making it to the registry. That they've recovered in nominal terms would be related to greater pricing flexibility that individual sellers have relative to promotors. The end result - continued mild downward pressure on prices. In any event, current statistics for new homes no longer suffer from the lag evident in earlier years.

Interesting are reports that the prices of raw land, materials and construction labour (earlier mentioned here) have fallen so much that those builders and promotors still with access to capital are giving serious thought to starting new projects. Under current conditions, these can be brought to market cheaper than even the discounted prices presently demanded for existing projects. Perhaps that explains this new development from Taylor Wimpey,

If this kind of thing catches on, it will be real bad news for anybody holding late boom stock. Of course, there would be winners, too.

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