Depreciation on Spanish Foreclosed Homes Reached 63%
December 6th, 2013
Moody’s credit rating agency indicated recently that the accumulated depreciation on foreclosed homes in Spain since the beginning of the crisis has reached an average of 63%. This percentage is well above the 41% average decline registered, according to the National Statistics Institute, in housing prices between the first quarter of 2007 and the second quarter of 2013.
The rating agency stated that the largest price declines registered, related to sales of foreclosed homes in the regions of Murcia (-78%), Valencia (-71%), Catalonia and Andalusia (both -69%) as well as the Canary Islands (-67%).
In these regions, the average decrease in housing prices, between the first quarter of 2007 and the second quarter of 2013, was 32% in Murcia, the Canary Islands and Andalucía, 37% in Valencia and 48% in Catalonia.
El Mundo reported that, in the whole of Spain, the greatest decreases in the price of housing since the beginning of the crisis correspond to Catalonia and Aragon (48%), Madrid (46%), and the Basque Country (43%). In Castilla y León, the price of housing has accumulated an average decrease of 39%, while in Castilla-La Mancha and Valencia the average decline is 37%.
When analysing only foreclosed homes, the prices fell by an average of 64% in Aragon and 62% in Madrid, while they dropped by 61% in Castilla-La Mancha and by 60% in Castilla y León. The decline in prices registered in the Basque Country reached 56%.
Moody’s warned: “The largest losses are concentrated in the foreclosed properties on the Mediterranean coast, Andalusia and the Canaries ( … ) although it will not lead to a lowering in the rating, taking heavy losses on foreclosed mortgaged homes is detrimental for the credit”.