Spanish property down further as expert warns of two year wait for recovery
Spanish prices down
Real estate prices in Spain are still falling according to the latest figures to be published by the country’s National Institute of Statistics but there are signs that sellers are more realistic.
The INE figures show that residential property prices fell 2.2% in the third quarter of 2010 compared with the same period in 2009. The price of both new properties and re-sales are falling, down 2.6% and 1.8% respectively year on year.
Madrid was the only region to experience rising prices in the third quarter of 2010, up by 0.9% compared to a year earlier. Andalucía saw prices fall by 2.2%, The Balearics were down 2% and the Canary Islands down 2.9%. The biggest fall was in Cantabria, down 6.7%.
Vendors are dropping their asking prices in record numbers, according to figures from Idealista.com, one of Spain’s leading property portals. A record 26,188 vendors advertising their homes for sale at Idealista reduced their asking prices in November, 15% more than the previous month. Compared to November last year, 80% more vendors reduced their prices.
But properties are still hard to sell. A report in El Mundo says that there are 45,000 homes on the Balearic property market. In Palma de Mallorca alone there are reported to be 15,000 empty homes for sale. However, the rental market in The Balearics is doing well, with a strong rebound in demand, according to local estate agents.
The construction sector is also suffering. Housing starts fell by 25% in the third quarter of 2010 compared with the previous three months. Over 12 months there were 69,194 housing starts, 31% less than the previous 12 month period, and 246,331 construction completions, 34% down.
An analysis by Spanish property expert Mark Stucklin of Spanish Property Insight, suggests that prices are set to keep falling for another two years. He points out that the latest economic data from the Bank of Spain shows the full brutal extent of the country’s real estate crash.
The figures reveal that the supply of new homes outstripped demand for most of the last decade leading to today’s glut, which the bank estimates at somewhere between 700,000 and 1,200,000 homes. The biggest glut is to be found in Valencian, Murcia and Cantabria, over 6% of the housing stock. Andalucia is in the second group with a glut of 3.6%.
The Bank of Spain figures also show how official house prices have fallen back to where they were around 2005. ‘That is not to say they won’t fall further. In reality, official figures belie the true extent of the crash as prices have fallen significantly more than they suggest,’ said Stucklin.
A chart also compares the price evolution today to previous property slumps in 1979 and 1991. In both previous cases prices fell for about four and a half years before bottoming out. ‘So if the past is anything to go buy, prices today will continue sliding for another two years, and could fall another 10% if this turns out to be a repeat of 1979,’ Stucklin added.
The bank data also shows that the biggest falls in prices have been in areas where foreigners tend to buy holiday homes, the islands, Malaga, Almeria, Murcia, and Alicante, with price falls above 15%. The biggest decline of all was in Malaga, home of the Costa del Sol, down 20% since the peak.