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Increase in Spanish property sales due to 'one-off' reasons

Source: El Pais - Tue 8th Mar 2011

Spanish property sales increased for the first time in four years, however this increase was as a result of a number of one-off factors, with the property market as a whole still looking troubled.

Earlier today the Ministry of Public Works announced how sales for the year to date have grown by 5.9% at 491,000 units. In the final quarter of 2010 purchases were up 14.2% at 150,268 units, and of the total sold, 59.3% were resale properties and 40.7% were for newly built homes.

The government increased the rate of IVA on new build property sales from 7% to 8% from July 1st, and also ended previous tax breaks for buying a family home for all but lower-income families. The property market in Spain is still struggling to come to terms with a massive glut of properties left behind by the collapse of a decade-long property boom.

Property priced hit their ceiling towards the end of 2007, with many experts believing that they still need to decrease further in order to eliminate the stock of unsold properties. At the same time demand has also fallen due to significant level of unemployment.

Industry experts, have suggested that the main reason behind the increase in sales last year was the pending removal of tax breaks and because of a particularly weak 2009. He concurred that the key to the recovery was how properties were priced, and that they have further to fall before a recovery can be seen.

The ministry reported how property sales increased in 11 of the 17 Spanish regions, with Pais Vasco seeing a 30% increase, but falling by 16.3%in Murcia.

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