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Spanish property price crisis shown by latest year on year figures
18 May 2009 @ 12:53

There is no let up in the property price crash in Spain as the latest figures to be published show that in some areas, particularly the Costas, the downward trend continues.

Spanish property prices fell by 10% over the 12 months to the end of April, the figures from the property price index published by Tinsa, one of Spain's leading appraisal companies, shows.

Coastal areas were the hardest hit where the high concentration of second homes has meant that the market has seen a large decline in the number of foreign investors. Average prices in coastal areas fell by 13.5%.

Big cities, including Madrid and Barcelona saw the next biggest drop in prices, down an average of 10.3% and the Balearic and Canary islands saw a much smaller fall at 9.2%.

An examination of the yearly figures shows an up and down pattern. Large cities have seen a steady decrease in prices which dropped 1.9% in April 2008 and declined every month until April 2009.

The Mediterranean coast has seen prices zigzag – down 1.2% in April 2008, down 8.3% in august last year and seeing similar large price drops in October and November. Then the steepest decline came in December (-14.3%) and January saw prices fall 12.6%. There was a slight slowdown in the decline in February (-10.7%) but that has climbed again to -11.5% in March and -13.5% in April 2009.

Prices in the Balearic and Canary Islands initially bucked the trend seeing a 1% and 1.4% increase in April and May last year but began falling in June. The rate of decline has been steady since then and reached a peak of -9.2% last month, the year on year figures show.

With the number of foreign property investors declining the government is now trying to encourage Spaniards to buy more property but it latest measure has been criticised as rash. Mortgage relief for borrowers with incomes of €24,000 or more is to be eliminated in 2011. This is supposed to encourage people to buy sooner rather than later.

But developers have criticised the move calling it 'negative' and opposition leader Mariano Rajoy described it as an attack on the interests of the middle classes.

Source: PropertyWire



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