The positively dismal INE home sale statistics for the month of November (mostly reflecting purchases made in September and October) offer an object lesson in the costs associated with temporary political interference in market activities. Following July's 1 percent increase in the value added tax applied to new home sales, transactions - of both new and used - have tanked to lows for the entire price series. The effect of the tax change, intended as a negative incentive to reel purchases in from the future, has been to remove organic demand from the housing market. Readers might expect this to last into late winter with trailing 12-month sales falling closer 400,000 in the process.
In itself, this is no great emergency. But it comes at a very inopportune moment. With it being generally thought that the current high interest rate demanded by purchasers of Spanish government debt is a result of potential liabilities with respect to the country's banking sector - themselves (especially the cajas) under intense pressure to be more transparent about the value of real estate assets on their books as a prerequisite to seeking private capitalization - a notable drop in prices for lack of demand would be less than welcome.----------------------------
Ibex Salad regularly updated features...
0 Comments:
Post a Comment