The recovery in Spanish house prices remains elusive, despite encouraging signs in July, says the latest house price report from Fotocasa, a spanish property portal.
I ended the last article saying that house prices in Madrid will stop falling when the mortgage market returns to life, and the same is true for the whole of Spain, where house prices continue to fall, as confirmed by the latest index from Fotocasa.
House prices are still falling for several reasons, chief amongst them the crash in new mortgage lending. Without a mortgage loan, most people can’t afford to buy a home, so prices fall as vendors continue to outnumber buyers by a wide margin.
Fotocasa’s report, prepared in association with IESE Business School, shows that asking prices fell 0.4pc in August, to 1,767 €/m2, leaving prices 39.9pc lower than they were at the peak of 2,952 €/m2 in April 2007.
Resale asking prices, now at a national average of 1,767 €/m2, fell month-on-month in all Spain’s autonomous regions in August, with the exception of the Valencian Community (home to the Costa Blanca and Costa Azahar), where asking prices rose by 0.2pc, and the Balearics, where prices were stable in August.
Asking prices fell the most in La Rioja, down 2.1pc, making it the Autonomous region where asking prices have fallen most peak-to-present, down 50.5pc. At the municipal level, prices in August fell the most in San Javier, Murcia, down 10.2pc to 1,140 €/m2.
The Basque Country, in the north, remains the most expensive region in Spain (with vendors asking an average of 3,078 €/m2), followed by Madrid (2,375 €/m2), and Catalonia (2,203 €/m2). San Sebastian has the highest asking prices (4,355 €/m2).
At the other end of the scale is Castilla-La Mancha (1,245 €/m2), Extremadura (1,267 €/m2) and Murcia (1,273 €/m2), with Fuensalida, in Toledo, the cheapest place in all Spain (800 €/m2). So you know where to head for a cheap home in Spain, though getting there might be a struggle.
Asking prices rose in 11 provinces (22pc) in August, and fell in 37 (74pc), with the biggest fall of 2.8pc in Teruel, which briefly enjoyed some UK media attention during the boom as an investment hotspot. By municipality, prices fell in 234 of them (62pc) and rose in 133 (36pc).