Madrid, July 12 : Home sales in Spain decreased by 3.7 percent to a total of 26,222 in May this year on the same period of last year, the Spanish National Institute of Statistics (INE) reported Thursday.

Sales of new houses fell by 10.3 percent in May to a total of 11,561, while purchases of second-hand houses increased by 2.3 percent to a total of 14,661 sales, reported Xinhua.

Purchases of non-subsidized houses represented 90.1 percent of the total, with its sales decreasing by 2 percent to a total of 23,881 operations.

Meanwhile, purchases of subsidized houses decreased by 17.8 percent in annual terms, to a total of 2,341 operations.

Since the beginning of this year, those buying a new house have to pay a sales tax of 10 percent instead of the previous 4 percent, while not being able to benefit from fiscal deductions when buying a primary residence.

These measures implemented by the government made home sales increase in the last weeks of 2012 and at the beginning of 2013 because people tried to avoid paying those taxes. Housing prices have been declining since the economic crisis started in 2008 but experts say they still have to fall more.

Local media reported that prices fell by up to 55 percent in places such as Malaga in southern Spain but in other parts they decreased by around 13 percent, such as in the north-west of the country.

The fall in prices could encourage Spaniards to buy houses, but high unemployment at 27 percent and lower salaries are undermining people's purchasing power causing a contraction of the domestic demand which delays Spain's economic recovery. (IANS)