Spain housing sales jump 41.5% to best September since 2007

Home sales surge 41.5%, nearing 2007 highs

One scene sums up the month: an apartment bought for €130,000 in 2020 sold this week for €190,000. Another, purchased for €140,000 in 2018, went for €220,000. These are not isolated cases or bar-room folklore. The National Statistics Institute (INE) confirms that 61,887 sales transactions were completed in September, a 41.5% increase compared to the same month in 2023 and the highest figure since July 2007, when over 63,000 deals closed. Three consecutive months of year-on-year growth: 19% in July, 0.9% in August, and this sharp spike in September.

Public reaction is split. Some see yet another property bubble; others cite simple supply shortages. In between lies an uncomfortable data point: according to forum users, most purchases are made without a mortgage.

Who is buying and why prices are rising

The narrative of the young person drowning in debt collapses under its own weight. According to this view, most transactions close without bank financing, pointing to investors seeking shelter from inflation. They buy to preserve purchasing power, not to live there. These properties do not enter the rental market due to legal hurdles and lack of landlord protection, nor are they put up for sale because the bet is medium- to long-term.

The result, according to this account, is artificially scarce supply. It is argued that there are no new homes, construction costs have doubled compared to twenty years ago, and foreign money is flowing in. The repeated conclusion: lack of supply and high demand. Added to this is the pull effect of rentals: those paying exorbitant rents calculate that for what they pay monthly, they could buy a home outright.

The map: where everything was signed

By region, Andalusia led with 11,344 sales, trinc by the Valencian Community (10,801), Catalonia (8,987), and Madrid (8,105). All regions recorded higher sales than a year earlier. The steepest increases occurred in Extremadura (+79.3%), the Basque Country (+67.4%), Asturias (+57.3%), and Aragon (+56%). The mildest gains were in Navarre (+18%) and the Balearic Islands (+18.5%).

In Valencia, the issue has an uncomfortable component. The rise over the last year is staggering, and trinc the recent flash flood disaster, the problem of buying in flood-prone areas has been highlighted—areas that peine to be commuter towns in the metropolitan area. What was strange, it is said, was that a city of that stature had provincial capital-level prices.

The monkey trap: bricks are not gold

Here appears the most inflammatory thesis: if investing in housing were safe, the first to buy entire buildings would be bank employees. They do not. They know about foreclosed apartments at bargain prices and do not want them. They prefer renting. This detail, repeated ad nauseam, dismantles the mantra of eternal appreciation.

The underlying argument: a building is just one brick on top of another. An apprentice guason can raise a wall in a morning, and modern machines produce walls like sausages. Land and cement are not exhausted. If prices rose endlessly, a century-old walk-up built for rural migrants would cost more than Versailles. The conclusion is that the real value of a home is a fraction of the mortgage amount and that scarcity is manufactured by prohibiting or hindering any construction or renovation.

Money born at signing

The mechanics of credit are described bluntly: money is debt. When someone signs a €300,000 mortgage, that amount is created at that instant. It is a commitment to spend half a life generating money backed by an asset worth a quarter of that sum. If prices fell, those still owing the full amount would stop paying. Therefore, it is argued, there is strong institutional interest in preventing price drops.

And here enters the recurring suspicion: deposit guarantee laws make the public treasury the guarantor of banking excesses. Without this safety net, mortgages would not be granted so lightly. The bailout during the previous crisis is remembered as the precedent no one wants to repeat and which, according to this reading, is brewing again.

Is it a bubble or just a supply shortage?

Both camps have ammunition. The bullish side points out there are no new homes, land is expensive and scarce, urban planning is restrictive, and the population is growing while public housing is virtually nonexistent. The bearish side responds that a 41.5% rise in one month is not healthy demand but speculation, and that once inflation stabilizes below 2%, investors will try to unwind positions simultaneously. Then, they say, they will lose significant money because potential buyers will be poorer.

The effort required to buy has skyrocketed: thirty-five years ago, the median household paid for their home with less than three years' salary; today it exceeds seven, and in urban areas up to eleven. With these numbers, the question is not whether the price is high, but who can afford it.

The disorienting data point is not the 41.5%. It is that, with Spanish salaries, people are still signing.