The collection of housing taxes received by the autonomous communities continues to fall due to the weakness of the real estate market. In the first four months, tax revenues fell by 14.9% in Spain as a whole, while in Catalonia, which has just published data up to May - one more month - the decline ranges from 10.1% of the property transfer tax (ITP) and 15.7% of documented legal acts (AJD).
The fall is a consequence of the decline in property sales and the granting of mortgages. In the first four months of the year, sales fell by 3.4%, but in April the drop compared to the same month in 2022 was already 8.5%. In the case of mortgages, the decline is even greater: from 9.5% in the first four months of the year to 18.7% in April.
The falls come after record revenue growth was recorded in some communities last year. In Catalonia, for example, it took sixteen years to recover the level of tax revenue linked to housing that existed in 2006, just before the burst of the bubble. It was last year when the level of tax collection from the Generalitat related to the purchase of housing was recovered.
How long will the fall continue? "Tax revenues should tend to stabilize, but one thing is clear: house prices do not go down, and if rates go up, buying a flat becomes unaffordable in many cases", answers José García Montalvo, Professor of Economics at Pompeu Fabra University (UPF). The Euribor is around 4%, but economists believe it could even rise a bit more and then stabilize or slowly decrease. And while it's not the highest rate level in history, it is the highest prices ever seen.
Documented legal acts tax is what is paid, among other things, when a mortgage is established. The one for patrimonial transmissions acts for the sale of a second-hand property. The AJD did not manage to recover its level last year due to the different profile of buyers compared to the bubble period. In those years, the customer took on debt to buy their flat or house, whereas last year there were many transactions with accumulated savings because they are used for investment. And obviously, when the purchase is made without leverage, this tax is not paid.
In the monthly report of the Generalitat corresponding to the month of May, in which the evolution of income and expenditure is detailed, the Department of Economy, headed by Natàlia Mas, specifies that "real estate transactions have been falling for the last months due to the increase in the interest rate and because the savings generated by the pandemic have been reduced". The trend has been observed since the beginning of the year.
The collection for housing in the coming months may also be affected by the elections on 23-J. "The electoral cycle could affect it because a new government could decide to change the Housing law even though the underlying trend continues", reflects García Montalvo .
The professor explains that in recent months they have carried out an investigation cross-checking data on leases and property sales after the implementation of the failed rental law in Catalonia. According to García Montalvo, they have indeed appreciated an increase in assets for sale although - he adds - it is not significant enough for a change in the market trend.
The collection of ITP and AJD taxes in Spain as a whole rose to 3,115 million euros in the first four months of the year.
In Catalonia, the data corresponding to the period between January and May is 1,073.2 million. In the community of Madrid it rose to 599.8 million even though the data only covers until April.
