Spanish house prices fell for the 5th consecutive year in 2011, according to data from Idealista.com (based on asking prices), a leading property-portal.
The average asking price is now 20pc below the high reached at the end of 2007, and back to where it was in 2004, when the boom had run about half its course. The chart above illustrates this with data from Madrid (blue line) and Barcelona (orange).
But house-hunters are still not satisfied, according to Idealista’s ‘Demand Thermometer’. Potential buyers are looking for an additional discount of 21pc on average before they jump in.
As always, asking price reductions have not been uniform across the country: In some areas, like Lleida (Catalonia) and Puente de Vallecas (Madrid), asking prices are already down by more than 40pc.
As far as all other housing market indicators go, 2011 was another bad year, if not the worst since the crisis began (final data will not be in for a few months). Property sales, house building, mortgage lending and confidence all tumbled to new lows, whilst repossessions hit new highs.
Outlook for 2012
Property price falls accelerated towards the end of 2011, boding ill for 2012. Most market watchers expect prices to continue falling in 2012, as banks slash prices to shift their properties, and private vendors follow suit as the credit crunch drives down budgets.
I agree that 2012 will be another bad year for the Spanish property market as a whole, but I also think it could be the start of better times on the coast for 1) quality, up-market areas with diversified international demand and 2) low-cost property in well-consolidated areas. Bargain-hunters from non-Euro countries like the UK, Norway, Switzerland and Russia, will be on the prowl as a weaker Euro and falling property prices combine to attract the curiosity of investors.
But all bets are off in the event of a major macro-economic shock in 2012.
One thought on “Spanish property market in 2011: another year spent up the creek”
Paul Wentworth says:
Well Mark, when my wife and I attended ‘A Place In The Sun’ exibition at the NEC last year and I got the chance to speak with the presenter Johnny. I asked him for his thoughts on the present Spanish Property Scene, his replies were not very reassuring to say the least.
His closing comment was ‘that there was still a lot of pain to come and buyer beware’, how right he was!
Your right I think, although some buyers are evidently prowling ,ourselves included, they are extremely cautious and will not be too ready to open negotiations unless they are very sure that the market has really bottomed out.
However given the poor economic outlook factors as mentioned in your article I can’t see that point being reached any time soon, even though we would all like it to.