Spanish property prices may barely have fallen so far, if you believe the official figures that is (down just 0.5% in 2008), but all that is going to change in 2009, according to BBVA, one of Spain’s largest banks. Prices will fall “close to 5% in 2009 and 10% in 2010,” says José Luis Escrivá, head of research at BBVA, leading to a total fall of 25% by 2011. Swiss banks Credit Suisse and UBS have already forecast falls of 30% in a similar time frame.
BBVA also estimates that the inventory of new homes languishing on the market in search of a buyer stands at between 800,000 and 1.4 million, somewhat higher the Ministry of Housing’s estimate of 650,000 unsold new homes. Neither offer figures for the number of resale properties on the market, which is likely to be at least as big again.
With Spain’s housing glut putting prices under pressure, it won’t be until 2010 that the market starts to digest the oversupply, thanks to lower mortgage rates and a drastic fall in housing starts. BBVA forecasts that in 2010 base rates will be 1% and Euribor – the interbank lending rate normally used to calculate mortgage repayments in Spain – will be just 1.9%, whilst housing starts will be down to 200,000 per year, from more than 800,000 in recent years.