Spanish Property Prices Continue to Fall
April 21st, 2009
Spanish property prices fell at their fastest rate since records began in the first quarter, government data showed on Wednesday, while analysts forecast more big falls in property values.
House prices in Spain fell 6.8 percent in the March quarter, compared with the same period in 2008. On a quarter-on-quarter basis prices declined by 3 percent — the fourth consecutive fall and the biggest yet.
Credit Suisse analysts said supply and demand were out of kilter, with one in six people out of work and 1.5 to 2 million houses sitting unsold. The average Spanish home costs 7.2-times the average household’s annual income, against 4.6-times in Britain and 3-times in the United States, the bank said.
‘In our opinion, the market continues to be significantly overvalued. Unemployment is fast increasing and that is a leading indicator of future delinquencies in the banking sector and potential declines in house prices,’ the Swiss bank said in a note after the figures were published.
Most industry experts say government data underplays price declines in the Spanish property market, which saw a 39 percent fall in the volume of sales in January, year on year.
House prices in Ireland, whose housing boom is most frequently compared with Spain’s, fell 9.7 percent year on year in February — the 24th consecutive month. In the UK, prices had dropped 12.3 percent over the same period.
‘I think we are all aware that prices had not adjusted to their true value. This tendency shows the adjustment,’ Anunciacion Romero, housing ministry director general told journalists. She declined to say were prices would go from here.
A recent Reuters housing poll of Spanish and foreign-based economists found that on average prices were expected to fall 32 percent from their 2007 peak.
Most analysts said prices would not bottom out until at least next year, and that it would take at least three years to absorb Spain’s supply overhang.
Spain’s TINSA property valuation consultancy reported a 9 percent drop in February prices from 12 months before.
Story from Forbes
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