Falling land prices could mean cheaper new homes in future
Land prices in Spanish cities fell 14.9pc over 12 months to the end of June, reveals a closer inspection of the latest property prices figures from the Ministry of Housing.
The 15pc annualised fall in Q2 was the biggest fall on record since the Ministry of Housing started publishing this data in 2005. As a result, the average cost of building land in Spanish cities now stands at 210.7 Euros/m2.
However, on a quarterly basis (Q2/Q1), land prices actually rose, by 3pc from the all-time low of 205 €/m2 in Q1, at least according to the Ministry’s notoriously unreliable figures.
Dramatic increases in land prices were one reason why Spanish house prices went through the roof during the boom, as land prices (driven by land speculators) accounted for an ever greater share of the cost of property (as much as 60pc in some cases).
Lower land prices mean cheaper homes in future, once the new-build glut has been dealt with, which could take years.