Homes sales break a 17-month downward trend

Home sales in Spain rose in August for the first time in 17 months, but purchases remained at levels of under half of those seen five years ago as a massive property bubble neared bursting point.

According to figures released Tuesday by the National Statistics Institute (INE), the number of transactions in August came in at 27,708, up three percent from the same month a year earlier. For the first eight months of the year, sales were down 16.3 percent.

The uptick in activity may reflect homebuyers entering the market in order to take advantage of tax breaks on mortgages on the family home that are due to be pulled at the start of next year.

The value-added tax rate on new home purchases was also raised from four percent to 10 percent at the start of September as part of the government’s austerity drive. New home sales were up 6.2 percent in August.

After falls of over 30 percent from their peaks at the end of 2007 and the start of 2008, house prices are a lot more accessible, although a major factor working against that incentive is unemployment of almost 25 percent.

There were wide differences between the country’s regions in terms of home sales in August, with Castilla-La Mancha, La Rioja and the Balearic Islands enjoying increases of close to 30 percent. That compared with falls of a similar magnitude in Navarre and the Basque Country.