The real estate sector accentuates its decline: home sales sink 10.5% in July and accumulate six months of decline

The sale and purchase of homes has been declining for six consecutive months. According to the latest data published this Wednesday by the National Institute of Statistics (INE), the real estate market accentuated its decline in July, registering 10.53% fewer sales than in the same period of the previous year.. The rate increases and the consequent increase in the cost of financing take their toll on the sector, which is unable to reach the volume of the last two years.

In the month of July, a total of 48,303 purchase and sale operations were carried out, the lowest figure for the seventh month of the year since 2020, when just over 32,750 transactions were carried out in a market that was still suffering from the collapse caused by the pandemic.. However, the current market trend is far from the recovery that the real estate sector was experiencing then. The data released this Wednesday by the INE is 10.53% lower than the 53,987 sales and purchases registered in July of last year and represents the sixth consecutive month with negative interannual rates, since a drop of 6.61% occurred in February.

The year-on-year decline in July accelerates the slowdown in home sales, as it increases by more than four points the June figure, which recorded a drop of 6.4%. In fact, the July crash is the steepest since January 2021. So far this year, transactions have accumulated a drop of 5.3%. Compared to June of this year, home sales have decreased by 10.55%, the second largest monthly decrease for the month of July in the historical series, only surpassed by that of the year of the pandemic.

The downward trend in the real estate market in recent months coincides with what at the moment appears to be the final stretch of rate increases by the European Central Bank (ECB).. The institution chaired by Christine Lagarde undertook its tenth increase last Thursday, raising the main financing rate to 4.5% and the deposit facility to 4%, both rates at unprecedented levels since the entry into circulation of the euro. This strategy, which aims to cool the economy to control inflation, makes access to financing for the purchase of a home more expensive, hence its negative impact on the behavior of the real estate market, whose collapse was predicted after last year's record sales figures. .

The decrease in home sales in July was due to both the drop in second-hand apartment transactions and those involving new homes.. In the seventh month of the year, second-hand sales continued to be the most numerous, representing almost 83% of the total. However, they fell 11.2% compared to the same month in 2022, while acquisitions of newly built apartments fell 7.4%, to 8,267 operations. Furthermore, 92.7% of the houses sold in July were free homes, compared to 7.3% for subsidized homes, with transactions on both types falling by 10% and 16.5% respectively.

According to the INE, two out of every three home sales made in July were made between individuals, a total of 33,068. In the seventh month of the year, 1,575 donations of homes were added to the purchase and sale operations, 1.75% less than in the same month last year, and another 16,245 transmitted by inheritance, 0.87% more than a year ago .

They drop in 14 communities

The drop in sales has been especially pronounced in Galicia, the Canary Islands, Navarra and Madrid, where operations fell in July by 22.8%, 18.2%, 17.2% and 16.6% respectively compared to the same period. month of 2022. In absolute values, Andalusia was the region where the most housing transactions were carried out during the seventh month of the year – a total of 9,891 sales -, followed by the Valencian Community (7,973), Catalonia (7,726) and Madrid (5,431 ).

Smaller were the declines recorded in the Basque Country and Cantabria, where home sales fell by 2.5% and 3.4% respectively in July.. Faced with generalized declines, home sales rose in July at an interannual rate in three regions. In Extremadura, Asturias and Murcia transactions increased by 5.2%, 3.8% and 0.2% respectively. The highest number of home sales per 100,000 inhabitants occurred in the Valencian Community (189), Murcia (149) and Andalusia (144).