Spanish Land Prices Start To Fall
May 26th, 2008
Urban land prices are starting to fall in Spain as developers who are short of cash are forced to sell in order to make money.
The price of land in Spain fell by 2.7 per cent to €277 per square metre in the last quarter of 2007, according to figures from the ministry of housing. This was a significant drop compared to the same quarter of the previous year.
According to the website Spanish Property Insight (SPI), the price of land fell in some areas of the country more than others. Although in some provinces the drop was as little as one per cent, in others it was much higher. In Alicante prices were down by 33 per cent, Córdoba 25 per cent, Barcelona 15 per cent, and Málaga 13 per cent.
The fall in prices is due to the recent downturn in the Spanish property market as an increasing number of developers are being forced to sell land to raise cash, or face going bankrupt. Around a fifth of Spain’s housing has been built in the last 10 years to cope with the increasing demand for homes there from British buyers. However, due to the global credit crunch and the fact investors are now choosing to look at housing markets elsewhere, many new developments are now standing empty and properties are not being sold.
According to SPI, the cost of land can sometimes be up to 30 per cent of the cost of a new home, and in some areas, such as Madrid, as much as 50 per cent.
Although falling land prices should eventually mean developers will have to lower their prices, this is going to take time to happen. At the moment SPI says developers have an estimated stock of 500,000 unsold newly built properties to sell before the fall in land prices will flow through to property buyers.
However, the Euro Residentes website reckons the Ministry of Housing in Spain has ruled out a sharp fall in property prices and has said the housing sector will recover in 2010, when the demand and supply of housing will readjust itself.
Full story from www.homesworldwide.co.uk
