Average house prices in Spain fall

According to figures published by Tinsa, a Spanish property valuation company, the average price of a house or flat fell by 6.8% in August compared to the same month in 2010. This means that prices have fallen overall by 23.5% since the end of 2007.

These figures also mean that the average price of a flat in Spain has fallen for 8 consecutive months. The fall in prices in August was the highest so far following a fall in price of 6.4% in July and 6.6% in June. In May prices fell by 5.9%, by 4.4% in April, by 3.7% in March, by 4.5% in February and by 5% in January.

The fall in property prices is more pronounced in Spain’s larger cities at around at around 7.8% less followed by a fall of 7.1% in property prices along Mediterranean coastal areas.

Other areas saw falls of 6.4% in property prices in August compared to the same month last year while prices fell by 5.8% in metropolitan areas.

In the Balearic Islands and the Canary Islands the price of flats have fallen on average by 4.9% since August 2010.

Following these results for August 2011 the accumulated fall in property prices since the height of the property boom in 2007 reached 29.2% in some Mediterranean coastal areas.

Compared to figures for 2007 prices have fallen by 25.6% in large cities and 23.4% in metropolitan areas. In other areas the accumulated fall in house and flat prices in Spain is around 20.4% while in the Balearic Island and the Canary Islands it is estimated to be around 21.1%.

Crash in house sales in Spain

Sharp fall in house sales in Spain 

Figures for the first three months of 2011 show that house sales dropped by 30.4% following an increase in house sales at the end of 2010 due to the end of certain tax rebates on buying a property.

However according to figures published today by the government house sales fell even more by 40.8% during the second quarter of this year compared to the same period last year with just 90,746 transactions.

Nevertheless during the second quarter of this year the fall in house sales was even more noticeable compared to last year given that during the same period in 2010 there was an increase in house sales boosted by a rise in VAT from 7% to 8% which came into effect on 1st July 2010.

Spanish real estate market

Price of new Spanish housing by region

According to the Association of Property Valuers in Spain the price of newly built houses and flats fell by 4.7% during the first quarter of 2011 compared to a fall of 2.3% recorded at the end of the last quarter of 2010.

In June the price of an average house or flat in provincial capitals was found to be 2,419 euros per square metre (m2) which means that a house or flat measuring 90 m2 now costs around 217,710 euros.

Prices fell throughout Spain but especially in Aragon (8 %), the Balearic Islands (6.8 %), Extremadura (6.6 %), Murcia (6.3 %), Cantabria (5.7 %), Andalucia (5.6 %) and La Rioja (5.5 %).

In provincial capitals the price of new housing rose slightly in Pontevedra (0.9 %) and Zamora (0.3 %) while prices remained the same in Palencia and Badajoz.

The most expensive areas were found to be Barcelona where the average price of a house or flat was found to be 3,720 euros per m2, San Sebastian (3,615 euros per m2) and the Spanish capital Madrid (3,240 per m2). The lowest prices were recorded in Murcia (1,387 euros per m2), Badajoz (1,389 euros per m2) and Caceres (1,405 euros per m2).

The report predicts that over the next few months the surplus number of new houses and flats will be absorbed into the market given the existence of the potential demand although this also depends on the state of the economy and the availability of finance for people wanting to buy a home. The rhythm of sales will be gradual and slow and will go hand in hand with the reduction of prices by property developers.

According to the Association of Property Valuers the reactivation of the property market is closely linked to the speed at which the surplus stock of housing is absorbed – something which at present remains uncertain given the high rate of unemployment, economic uncertainty and the difficulty of obtaining a mortgage.

The report also says that the current process of restructuring the Spanish finance sector could have repercussions on the housing market because the availability of credit for buying property will be limited until the period of adaptation in the finance sector has been completed.

The Association of Property Valuers used information from more than 33,000 properties belonging to more than 2,350 property developers in 400 cities and towns throughout Spain.

Spanish mortgages 2011

Mortgages fall 38.2% in Spain

The National Institute for Statistics (INE) has published a report today which shows that the number of mortgages taken out for housing fell by 38.2% in April compared to April 2010 to 31,358. This is the biggest fall since April 2009 when the number of mortgages fell by 41.6%.

These figures point to a general slump in the number of mortgages being taken out for the purpose of buying a house or flat and end a year of consecutive falls despite a slight improvement during the first four months of 2010. The fall in April is much higher than in March when the number of mortgages fell by 20.2%.

The average amount for a mortgage was 106,889 euros in April which is 6.1% less than in April 2010. Capital lent fell by 42% to 3,351 million euros compared to the same month a year ago.

In April 50,089 mortgages were taken out for country and urban estates - houses and flats are included in these figures. This shows a fall of 37.5% compared to the same month in 2010 and 27.6% compared to the previous month.

Building societies conceded more mortgages than banks accounting for 49.2% of the total followed by banks at 37.5%. Other financial entities accounted for 13.3% of mortgages. Building societies conceded 43.4% of the total amount of capital lent, banks were responsible for 44% and other financial entities 12.6%.

The average interest rate in April was 4.04% which is an increase of 3.1% compared to a year ago and 2.5% compared to the previous month.
With mortgages taken out with building societies the average interest rate charged was 4.04% and the average number of years for a mortgage was 22. The figures are similar for banks with the average interest rate at 4.24% and the average number of years 21.

Nearly all mortgages taken out in April 2011 (94.2%) had a variable interest rate compared to 5.8% which had a fixed rate. The euribor was the most popular type of interest rate used (84.1%).

During April 2011 22,827 mortgage holders changed the conditions of their mortgages – this is 40.1% less than a year ago. With regards to mortgages for housing just 13,050 changed their conditions which is 44.1% less than in April 2010. The number of mortgage holders which changed banks or building societies was 2,790 which is 34.6% less compared to a year ago. Out of the 22,827 mortgages which were altered in April this year 35.5% involved modifications to their interest rates. Finally in April 2011 40,048 mortgages were cancelled which is 13% less than in April 2010.

Related to Spanish mortgages 2011:

• Mortgages in Spain
• Mortgages for non-resident buyers in Spain
• Glossary for buying property in Spain

New legal obligations of property owners in Spain

Property owners in Spain might be forced to spend more on work to improve access to residential buildings. Under current proposals Spanish law will be adapted so that it meets the requirements set out in the UN convention on the rights of disabled people.

The proposals for changes to the law have already been approved by the Spanish parliament and are now being discussed by the Senate. The changes to the current law on disabled access could force property owners to improve access for people with disabilities or for people over the age of 70 which costs no more than 12 ordinary community charges - in the past the law stated that it should not cost more than 3.

Specifically the proposals say that ‘property owners in flats where disabled people or people over 70 years old reside will be obliged to carry out the necessary work to improve access to the building which could mean the installation of mechanical or electronic devices’. However property owners whose annual incomes are not more than 2.5 the average salary in the index calculated by Iprem will be exempt.

Nevertheless disabled groups believe that the proposals under discussion do not go far enough and in some instances are ‘clearly insufficient’ which is why the Spanish Federation for People with Disability (Cocemfe) is currently lobbying members of the senate in order to improve the law before it is voted on in the upper chamber.

Cocemfe want more help offered to property owners who might find it difficult to pay for work to improve access to their building and has asked for ‘imaginative formulas’ to help those on low incomes.

One idea suggested by Cocemfe is that the government should assume the burden of payment for owners’ association which cannot afford to pay for work to improve access to their buildings and then recover the costs at a later date from the value of the properties when they are not longer needed.

House sales in Spain rose in January 2011

House sales up 20% in January

House sales increased by 19.6% in January compared to the previous month with 45,013 transactions.

Yesterday the National Institute of Statistics (INE) published the figures for transactions in January. Many of the transactions took place in 2010 but were not completed until January 2011 so therefore missed the deadline for the scrapping of the tax rebate for the purchase of property. The new rules came into effect in January 2011.

The increase was more notable in used housing where sales rose by 24.3% (23,168 transactions) while sales for new housing increased by 14.9 % (21,845 transactions).

House prices in Spain too high

EU says property overvalued by up to 17% in Spain

The European Commission has published a report in which it says that property in Spain continues to be expensive compared to the rest of the Eurozone. The quarterly report by the European Commission says that prices adjusted accordingly in nearly all Eurozone states by the end of 2009 except for in Spain where property prices at the start of 2010 continued to be overvalued by around 17%.

In its report the European Commission highlights what it calls ‘significant differences’ between European states in the rhythm at which prices are adjusting to the reality of market conditions. It says that ‘by the end of 2009 prices had gone a long way to correct imbalances in some member states but that there was still a long way to go in others’.

In fact the European Commission saw different tendencies in other member states to those seen in Spain. According to its report the cost of property is undervalued, especially in Germany. The study says that between 1998 and 2006 property prices rose by an average of 4% a year in Eurozone states. This phase of continual rises was then followed by a period in which prices started to decrease at the end of 2007. The accumulated decline in prices in the third quarter of 2009 was found to be 8.3%.

Nevertheless, the European Commission recognizes that Spain is one of the countries in the Eurozone where prices have fallen the most with an overall drop of 18%. The only other member state where prices have fallen more is Ireland with a fall of 37%.

Related to house prices in Spain:

• Reasons for living in Spain
• Buying property in Spain