Price of New Housing Fell 4% in 2011
January 5th, 2012
The price of new housing fell 4% in 2011, according to the Sociedad de Tasación (Valuation Society), bringing the price to 2,376 euros per square metre, and making the cost of an average home around 213,840 euros.
Looking ahead to 2012, the Sociedad de Tasación estimated that housing prices will continue their downward trend, after falling 3.2% in 2010 and 4% in 2011, although in some locations the decreases may be less pronounced than at present. “It is expected the adjustment will continue at the supply level offered in late 2008, adapted to meet a volume of demand lower than in previous periods,” they stressed.
With regard to the first half of 2011, the average price of housing shrank by 1.8%. Prices fell in all regions, although the decreases were more pronounced in Navarra (-7.3%) and Aragón (-7%), while the regions with the least severe declines were Galicia (-1.3%) and Extremadura (- 2.8%).
Europa Press reported that during the past year, the average price of new housing fell in 48 of the 50 provincial capitals, rose in one and remained unchanged in the other.
The capitals with the greatest decreases in the price of new buildings were Sevilla (-8.3%), Ciudad Real (-7.8%), Avila (-7.4%) and Zaragoza (-7.4%), while Zamora (+0.3%) and Pontevedra (0%) saw no significant changes.
In 16 of the province capitals the average prices fell by over 5% with respect to 2010, in 19 capitals the prices fell between 3% and 5%, and in 13 capitals the reduction was between 0% and 3%. In the two remaining capitals the cost per square metre did not register any noticeable changes.
On the other hand, four provincial capitals (Barcelona, San Sebastian, Madrid and Bilbao), exceeded the national average price per square metre of 2,376 euros, while in ten others (Murcia, Cáceres, Badajoz, Pontevedra, Jaén, Lugo, Zamora, Tenerife, Avila and Ciudad Real) the average value per square metre was below 1,500 euros.
In 2011, the number of new builds started stood at around 81,000 units. The level of activity in the housing market decreased last year due to difficulties in obtaining financing. Overall this reflected a decrease in prices, which was less pronounced in the second half of the year.
The Sociedad de Tasación noted a significant increase in the number of houses between one and five years old awaiting first occupation, being offered for sale by real estate departments of credit institutions and private individuals who are not real estate professionals. Furthermore, they noted an increase in the trend for rent-to-buy options.
Forecasts for 2012
According to the Sociedad de Tasación, with the rise in inflation and the Euribor in the previous year, it is foreseeable that the real income available for property purchases will struggle to regain the levels of previous years. This will be exacerbated by the rising unemployment and the associated job uncertainty.
Sales of new housing will remain important this year, says the Society, despite the reduction in the volume of new builds started.
“The marketing of the already built stock will be slow and will probably reduce more dynamically in the central areas of cities due to the scarcity of newly constructed buildings and also of developable land,” they said.
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