Skip to content
*The projections made for this year 2020, which are included in this article, have been made without taking into account the current circumstances of the health alert.
In 2019, Housing Transactions in Spain Showed Signs of Slowing down in an almost Generalized Manner.
The number of transactions has continued to be significant, with 501,600 sales, of which 15 percent, some 75,000, were made in the Valencian Community; however, the growth that had been occurring year after year since 2014 stopped in 2019, and the figures are slightly lower than those of the previous year, 518,000 in Spain and 78,775 in the Valencian Community. They are far from the almost 111,000 that were sold in 2007, but they are significant, and even if it falls somewhat, maintaining an annual sales volume in the range of 75,000 homes is not a sign of weakness in the sector.
Table 1. Home Sales
By province, there are declines in all three, although in Castellón it is practically the same in 2019, 8,642 homes, as in the previous year, with a reduction in sales of 1,181 homes in Valencia and 2,548 in Alicante, declines in the range of 3.5 and 6.5 percent, respectively. The projection presented for 2020 is made without taking into account the effects of this crisis; we have taken the trend of the previous two years, where the slowdown of 2019 weighs heavily, and it shows total sales of 71,079 for 2020, with Castellón remaining practically the same as last year, and declines of about 1,000 sales in Valencia, and 2,500 in Alicante. However, these data will be lower, given the supervening circumstances.
If we compare quarter to quarter, we see that in the first quarter of 2019, sales in the Valencian Community remain practically the same –the comparisons are with the same quarter of the previous year–; however, in the second quarter they fall and in the third as well, although in the last they recover. The interpretation is that the year starts relatively well, slows down for two quarters for a reason that is initially attributed to the parenthesis opened by the new mortgage legislation, and the small recovery in the last quarter is not enough for sales to exceed those of the previous year as a whole, and there are 3,848 fewer sales, representing almost 5 percent.
Going into the monthly detail, 2019 started strong in the Valencian Community with 7,256 homes sold in January; by month, from least to most, they were, in this order, December (5,228 homes), August (5,365), April (5,782), October (5,878), March (5,920), September (5,939), November (5,996), June (6,252), February (6,446), July (7,192), and May (7,613). The idea that there was a slowdown due to the mortgage legislation is not apparent from this evolution, which does not follow a trend; if anything, we see that sales from September to November are very similar each month, and that the market was lively in three consecutive months: May, June, and July. In short, we were facing a market that, with the spatial differences indicated, did not show a month-to-month weakness, although when we see the annual total, we see that reduction, which we mentioned before.
Regarding the effect of the current health crisis, we can say that in the month of January of this year, 6,485 homes were sold in the Valencian Community, which is a good figure, because although lower than the same month of the previous year, it does not deviate from the figures we have seen; however, since the end of February, for which there are no data, activity is suspended. In March and April, a total of about 10,000 homes may stop being sold, and the recovery of sales will depend on the normalization of economic activity and the damage suffered by the economy; however, buying a home is a decision for a very long term, and the current situation cannot be compared in any way with that of 2007 -with a skyrocketing supply, demand, indebtedness, and prices¬-, so it is to be expected that in 2020 sales will be affected, but recovering at the end of the year and the beginning of 2021.
There is concern in the real estate and construction sector about the consequences of interrupting activity, which was not mandatory according to the initial regulations on the state of alert, but has been so for a week. The Association of Construction Companies and Infrastructure Concessionaires has asked that the lack of liquidity be remedied, and demands that public contracts be automatically extended by 15 percent of the term. They emphasize the impact of the construction and infrastructure sector, which almost doubles in added value what it invests, and imports only 9 percent, which has a very strong dragging effect on our economy.
Although the government has chosen to restrict economic activity to essential sectors, the Spanish Confederation of Associations of Manufacturers of Construction Products (Cepco) was against paralyzing the works, due to the chain of effects it has, among which are the commitments of supply of material. Cepco is committed to guaranteeing the level of production to supply the normal work and the contingencies required by the public administration. Also, the Confederation of Businessmen of Andalusia had advocated for the continuity of the activity of the sectors that, even if not essential, are not obliged to stop their activity. This is one of the dilemmas of the health crisis, in sectors where the risk is considered low, but in the end, a total closure has been chosen in the confidence that activity can be undertaken at full capacity sooner.
