Spanish property prices fell by 7.8% over 12 months to the end of the November, according to the latest monthly Spanish house price index published by Tinsa, one of Spain’s leading appraisal companies.
After the latest decline, Spanish house prices are back to where they were between May and June of 2006, wiping out the capital gains of the last two and a half years.
House price declines are even more dramatic if compared to December last year, when Spanish property prices peaked. In the 11 months to the end of November, real estate prices fell 8.8%, according to Tinsa’s monthly Spanish Property Market Index, known as the Índice de Mercados Inmobiliarios de España (IMIE).
Once again, the most dramatic price falls were on the coast, where prices fell by an average of 8.5% over 12 months to the end of November (and by 12.8% over 11 months). Prices in the Balearics and the Canaries fell by an annualised 8.4%, a big increase on the 5.4% decline in October.
Meanwhile, Spain’s glut of newly-built homes keeps growing, as more completed homes come onto a market denuded of buyers by the credit crunch (amongst other things). There are between 600,000 and 1 million newly built homes now languishing on the market without any interest from buyers.
The good news, at least for the property market, if not for Spain’s job market, is that next year the number of housing starts looks set to fall off a cliff. Developers forecast just 150,000 housing starts next year, compared to 250,000 this year, and more than 600,000 last year.
And finally, the network of Property Experts (REI) announced today that resale property transactions are down 70% since 2005, a fall “much bigger than reflected in the official figures from the Ministry of Housing,” says REI. The Ministry of Housing counts inheritances and gifts as ‘transactions’, which explains why its figures do not accurately reflect market activity.