Fundamentals Still Weak For Spain Real Estate Market
News Article Date: Wednesday 21st of October 2009
Recent reports of deceleration in price declines in Spanish real estate, especially in resales, are being met with guarded optimism by industry insiders who fear the actual situation is much worse. While some regions of Spain remain attractive to foreign investors, overall residential construction levels are markedly down and home completions are only contributing to the inventory of unsold properties. For more on this, see the following article from Property Wire.
Malaga, SpainOverall Spanish residential property prices are continuing to fall but there is some light as the declining value of re-sale real estate appears to be slowing, according to the latest published figures.
Data from the National Institute of Statistics (INE) show that prices for new properties fell by 3.9% in the second quarter of the year and are now down 7.7% over 12 months.
But prices for resale property bucked their downward trend for the first time since the INE started publishing its index, with prices falling by less in the second quarter than in the first.
Prices were down 12.5% in the first three months of the year and that slowed to 11.2% in the second three months.
The index also shows that areas of Spain that are popular with foreign real estate investors such as Andalucia and Murcia have not been the hardest hit this year.
It is places like Catalonia, Madrid and the Basque Country where prices rose the most that have seen the biggest price declines.
But these so-called official figures need to be taken with a pinch of salt according to Spanish property experts Mark Stucklin.
‘The official figures are hard to stomach.
They would have us believe that new build property prices have only fallen by 6% since the crisis began.
Even the developers say prices are down by 20% or more,’ he explained.
Fewer properties are set to be built because of the real estate crisis.
Residential planning approvals were down 62% to 71,638 in the first half of the year, according to figures from the Ministry of Development.
Housing starts slumped by 60% in the second quarter of this year compared with the same period a year ago.
There were 96,473 new homes finished in the second quarter, 6.3% less than first quarter and 43% down on last year.
More than 429,000 new homes have been finished in the last 12 months, adding to the glut of properties for sale.
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