The collection of taxes for housing that enter the autonomous communities continues to fall due to the weakness of the real estate market. In the first four months, tax revenues in Spain as a whole fell by 14.9%, while in Catalonia, which has just published data up to May –one more month–, the decrease ranges from 10.1% of the tax of asset transfers (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, the drop in sales was 3.4%, but in April the drop compared to the same month in 2022 was already 8.5%. In the case of mortgages, the drop is even greater: from 9.5% in the first four months of the year to 18.7% in April.
The falls occur after record collection growth was recorded last year in some communities. In Catalonia, for example, it took 16 years to recover the level of tax revenue linked to housing that existed in 2006, just before the bubble burst. It was last year when the level of tax collection of 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: housing prices do not fall, and if rates rise, buying a flat becomes inaccessible in many cases,” answers José García Montalvo, professor of Economics. from the Pompeu Fabra University (UPF). The Euribor is around 4%, but economists believe that it could even rise a little more and then stabilize or slowly decrease. And although it is not the level of the highest rates in history, they are the highest prices ever seen.
The documented legal acts tax is the one that is paid, among other times, when constituting a mortgage. The patrimonial transmission agent acts in the sale of a second-hand property. The AJD failed to recover its level last year due to the different profile of buyers compared to the bubble period. In those years, the client borrowed to buy his apartment or house, and instead 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 for the month of May, which details the evolution of income and expenses, the Department of Economy, headed by Natàlia Mas, specifies that “real estate transactions have been falling in recent months due to of the increase in the interest rate and because the savings generated by the pandemic have been reduced”. It is a trend that has been observed since the beginning of the year.
Collection for housing in the coming months may also be affected by the 23-J elections. “The electoral cycle could affect why a new government could decide to change the Housing law, although the underlying trend continues,” reflects García-Montalvo.
The professor explains that in recent months they have carried out an investigation comparing data on rentals and real estate sales after the implementation of the failed rental law in Catalonia. According to García Montalvo, they have appreciated an increase in assets for sale, although he adds, it is not significant enough for a change in market trend.
The collection in the whole of Spain of ITP and AJD rose to 3,115 million euros in the first four months of the year. In Catalonia, according to the data corresponding to the January-May period, it is 1,073.2 million. In the Community of Madrid it rose to 599.8 million, although the data only covers up to the month of April.
