The price of building land in Spain fell by 7.8% over 12 months to the end of the second quarter, according to new figures from the Ministry of Housing. Building land in Spain, which normally accounts for between 40% and 60% of the cost of new homes, is now selling for an average price of 258.8 Euros per square metre, which the Spanish daily ‘EL Pais’ reports is roughly what it cost at the end of 2004.

Year on year land prices have now fallen for 4 consecutive quarters, though the rate of decline is starting to stabilise, if the government’s figures are to be believed. Compared to the first quarter of 2008, land prices actually rose by 3.1%, says the Ministry of Housing.

The annualised fall in the price of land was biggest in municipalities of over 50,000 inhabitants, where prices fell on average by 8.8% to 627.8 Euros m/2. Prices fell by 3.3% in municipalities with 10,000 to 50,000 inhabitants, and by 2.4% in municipalities of 5,000 to 10,000 inhabitants.

By autonomous region, the biggest falls were in Aragon (-20.2%), Madrid (-19.2%), Catalonia (-10.2%), and Valencia (-10.2%). In contrast, land prices rose the most in the Canaries (+11.8%), Cantabria (+10.3%), and Navarra (+8.9%).

The Ministry of Housing has also revealed that the number of land sales in the second quarter fell by 38%, to 7,956 transactions, compared to the same time last year, and by 10.5% compared to the previous quarter.

The government’s figures for transactions looks credible, but given the dire state of the Spanish property market, and the number of developers and speculators desperately trying to sell land, the price figures need to be treated with scepticism. With the Spanish economy heading for a deep recession as a consequence of its spectacular housing bust, it is hard to believe that land prices aren’t down further, let alone that they might have risen by 3.1% on a quarterly basis.