Luis de Guindos, the Economy Minister, says house prices have fallen 35pc since the peak, much more than official figures suggest.
According to an article in the Spanish daily El Pais, de Guindos says it is his “impression that finished housing sells at a discount of 35pc compared to prices before the crisis.”
That’s not enough for De Guindos, who has introduced financial-sector reforms forcing banks to make bigger write-downs on their properties, with the stated objective of bringing down house prices.
De Guindos has criticised banks for only lending to buyers of their own properties to “maintain the fiction of the value of their properties,” something he hopes his reforms will discourage.
The reforms introduced by De Guindos had an immediate impact on vendor expectations, with a 30pc increase in asking price reductions (by an average of 9.5pc, or €26,200) in the week after De Guindos announced his banking reforms, according to figures from Idealista.com, a property portal (see chart below).