Property market in Spain continues to perform poorly

Posted on June 27th, 2012 in Real Estate in Spain by author

Official figures released by Fomento, the Spanish government source, reveal that property values across the country fell by 37.5% last year compared to 2010. Excluding social housing, the country recorded a total of 307,931 house sales in 2011, representing an overall value of €50.5 billion.

The Property Register quotes slightly different figures but still shows the same depressing picture. According to the Property Register – 370,204 home sales including social housing took place in 2011. That means the Spanish housing market is now at its most contracted since the Property Register began releasing figures in 2005. In the final quarter of 2011 sales transactions declined by 11%.

The Property Register also revealed that only four regions control the property market: Andalucía, Catalonia, Madrid and the Valencia community have cornered nearly two thirds of the entire sector. Anyone researching figures on the Spanish property market should remember that global figures are not really representative of the actual picture in the country.

According the latest Asking Price Index published by Idealista.com, a leading property portal, asking prices for second hand homes and resales declined by an annual 3.4% during the first 3 months of 2012.

Fernando Encinar, head of research at Idealista.com, explained that the difficult lending situation and latest legislation introduced by the government to put pressure on banks and the property sector to continue with the strategy of making housing more affordable, has resulted in property prices sliding further downwards, a trend that is set to continue until the end of 2012.

“Today you can find homes at prices that seemed unthinkable, especially from the estate agents that are getting the best discounts in the market,” Mr Encinar added. Existing homeowners may be suffering thanks to lower asking prices, but newcomers into the market are happy about the greater affordability of homes.

Fomento’s figures also reveals that new planning approvals declined by 31% per annum in January with just 4,698 approvals being granted. Could this trend spell the end of the construction industry in the country? Once house builders were the driving force behind the Spanish economy, now they are at their wits’ end of how to stay afloat.

Meanwhile, BBVA, one of the country’s largest banks, has predicted the Spanish housing market will continue to contract with house values declining until at least 2013. Sales transactions are also predicted to decline by an additional 20% and house prices are to drop by another 15%, before the market has finally adjusted to rock bottom.

SOURCE: www.spanishpropertyinsight.com

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