Of all the countries in the EU, house prices fell the most in Spain last year, placing the country in a league of its own for double-digit price declines. Seasoned investors will know now is the time to look seriously at Spain.
Spanish house prices fell 12.8pc last year according to Government figures (see Official Spanish House Price Index falls 12.8pc in 2012). The EU House Price Index, just published by Eurostat – the statistical office of the EU – reveals that Spain was the EU country where house prices fell the most last year, by a long stretch.
House prices, as measured by the EU’s House Price Index (HPI), fell by 1.8pc in the Euro area
and by 1.4pc in the EU in the fourth quarter of 2012 compared with the same quarter of the previous year.
Among the Member States for which data are available, the highest annual increases in house prices in the fourth quarter of 2012 were recorded in Latvia (+9.8%), Estonia (+5.8%) and Malta (+5.4%), and the largest falls in Spain (-12.8%), Romania (-9.1%), and Slovenia (-8.8%).
No figures are available for Greece and Cyprus, where house prices are also likely to have fallen substantially, and might have given Spain some company in the negative double-digits.
It’s interesting to compare price changes in Ireland and Spain: Annualised property price declines in Ireland shrank from 16.3pc in Q1 to just 4.5pc in Q4, whilst Spanish declines ended the year almost exactly where they started.
I assume that Ireland is nearing the end of it property price adjustment process, whilst Spain is still at the nadir.
A time of opportunity
My interpretation is that, after 4 years of denial and unrealistic price expectations, enough vendors in Spain are finally coming to terms with reality. House price declines have been accelerating in the last couple of years, and Spanish house prices are starting to offer good value. There are great bargains to be had.
Prime Spanish property, in particular, might now a good investment for those prepared to do the homework to identify the opportunities.
In a world awash with central bank liquidity, menacing inflation, low interest rates, and risible returns on savings, ever cheaper Spanish real estate is starting to attract the interest of increasing numbers of international investors.