Is cheap property in Spain failing to attract investors?

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Cheap property in Spain is failing to attract investors in
July, according to the National Statistics Institute in Spain. But is the
market really in trouble?

The NSI data, revealed this week, found that transactions in
the country had fallen during July, despite low property prices. Annual sales of homes
dropped by 34.8 per cent year-on-year, and by 8.6 per cent on a month-by-month
basis.

VAT not A-OK?

The decline in sales follows the Spanish government’s decision
to slash VAT by 50 per cent last month, offering 4 per cent tax instead of 8
per cent on all new homes. The tax reduction, which expires at the end of 2011,
was designed to boost property sales and encourage growth in the recession-hit
housing market.

Not the whole story

But the country’s official statistics are being contradicted
by those of a Spanish company. Homebuilders Taylor Wimpey de Espana announced
this week that, contrary to national figures, it had received a 70 per cent
increase in enquiries about Spanish property during the first six months of
2011, compared to the same period last year.

Whichever statistics you believe to be more accurate, Spanish property certainly continues to be
available at low prices. And with the VAT reduction lasting for several months to
come, cheap property in Spain should attract investors back to the market before
the year is out.