Spanish house sales hit new low

Madrid: Spanish home sales declined the most in almost two years in April as the highest unemployment rate in Europe and the end of a tax rebate discouraged buyers.

The number of transactions fell 29.7% from a year earlier, after an 11.9% drop in March, the National Statistics Institute in Madrid said. That was the steepest decline since May 2009.

Spain, which has a 21% unemployment rate after a three-year slump, is working through an excess of one million homes left unsold by the collapse of a debt-fuelled construction boom. To clear the backlog, the government scrapped a tax rebate on mortgage payments and gave buyers a year’s warning before doing so to encourage them to bring forward purchases.

The decision prompted a surge in home sales through most of 2010 and the first two months of 2011 as buyers hurried to purchase properties and lock in a tax break of as much as €1,352 a year.