Nationally property prices are back to where they were at the start of 2005
Property prices on the Spanish Mediterranean coast fell by 14.3% in 2008, according to the latest monthly Spanish house price index published by Tinsa, one of Spain’s leading appraisal companies.
The fall applies to both newly built and resale properties, so this is the first closely-watched index to show big falls for newly built property.
Nationally, property prices fell by an average of 8.8%, taking values back to where they were at the start of 2005. At the same time last year prices were still rising nationally by 3.6%, and by 13% just 2 years ago.
Property values along the Mediterranean coast have been hit the hardest in this downturn for two reasons. Firstly, much of the market on the coast is made up of second homes, which nobody really needs so sales quickly dry up when budgets get tight. And secondly, because much of Spain’s building frenzy took place on the coast, so coastal municipalities are groaning under the weight of a newly built housing glut that is depressing prices.
Values in metropolitan areas, or suburbs, were the next biggest casualty of 2008, falling by 10.2%, followed by Spain’s islands – the Balearics and the Canaries – where prices fell by 9%. Spain’s big cities and provincial capitals saw prices drop by 8.1%.
Spain’s G-14 association of leading developers recently admitted that new build property prices fell by 15% to 20% in 2008, making it the worst year ever for developers. Combined with the falls in Tinsa’s latest house price index these are the biggest falls in property prices ever recorded in Spain.
Some experts expect 2009 to be even worse for the Spanish property market.