Home sales climb 12.8 percent in October

Housing market buoyed by removal of tax breaks next year

Spain’s struggling housing market benefited in October from pending tax changes as home sales climbed 12.8 percent compared to the same month last year to reach 25,261 units, according to figures released Wednesday by the National Statistics Institute.

Observers said sales were boosted by the removal of tax breaks on mortgage payments on the family home and the increase in the value-added tax rate on new homes from four to 10 percent, which will come into effect from the start of next year.

New home sales in October were up 13.8 percent from a year earlier, while existing home sales were up 11.1 percent. The biggest increases were in Castilla-La Mancha and Catalonia, while the biggest falls were in La Rioja and Cantabria.

The fall in prices has also had something of a positive impact. Leading property appraiser Tinsa said Tuesday house prices were down on average by 33.7 percent from their peaks at the end of 2007 before a decade-long boom turned to bust.

Sales have now increased three months in a row, breaking a 17-month downward spiral. However, the number of transaction remains well below the levels of 80,000 a month registered during the boom as high unemployment and tight credit continue to put a drag on demand.

The chairman of the Spanish real estate developers association (APCE), José Manuel Galindo, said Wednesday he believes the tax changes will allow sales to amount to 325,000 units this year, down seven percent from a year earlier.

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