Spain House Prices Fell 6.2 Per Cent In 2009
News Posted On: 15 January 2010
The Spanish Housing Ministry reported on Friday that the average house price fell 6.2 percent in 2009, up from the 2.8 per cent fall in 2008. In the last quarter of the year a drop of 0.5 per cent was recorded, compared with a 0.9 per cent drop the previous quarter.
Quarterly declines are apparently bottoming, despite the yearly data worsening, suggesting 2010 may not be as bad as most analysts fear. A survey carried out by Reuters shows expectations are for a 7.3 per cent fall this year, slightly more than last. Other experts concur that 2010 is setting up to be another down year.
"In Spain, property values have still not adjusted to the reality of the market. We think 2010 will be the year prices will adjust," said Javier Garcia-Mateo at property consultants Aguirre Newman.
"If prices fall, there'll be a market. People aren't buying houses in Spain because they can't afford it. The price of a house in Spain is equivalent to seven years' salary," said Javier Garcia-Mateo at property consultants Aguirre Newman.
Banks, which hold a large inventory of unsold property, have indicated they also expect prices to slide further.
"There are a lot of people with solvency problems or who are unemployed and so they cannot get a loan from the bank," said Lorena Mullor at the Spanish Mortgage Association.
One reason for the negativity of commentators is the nature of the large unsold housing stock. A goodly proportion of the bank-held properties are in coastal areas, and UK buyers, the traditional market for such homes, are strapped for cash and not bidding.
Now, when experts all agree, the antennae of contrarians start to twitch. Just today a report on BBC Radio 5 live flagged up the possibility that the price of gold could eventually rise to $10,000 an ounce. While such a prediction seems outlandish, it does show that some are thinking that the massive amount of borrowing by governments to stave off a global depression must eventually feed through as inflation. If so, Britons and others will once again be looking to tangible assets to preserve wealth, and I doubt if, after the current winter, coastal properties in Spain will be entirely off their radar. It is worth noting that the last time Spanish banks took on properties during a slump they eventually made almost obscene profits during the following boom.
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