Spanish property prices collapse
Thursday, 27 Mar 2008 13:35
New apartments in Madrid (pic: Javier Lastras)
Demand for property in Spain has experienced a dramatic collapse, as the sector which has powered the country's economy for a decade goes into freefall.
According to official statistics, published by the country's National Statistical Institute (INE) the number of property transactions fell by 27 per cent in January, when compared to the same period of 2007.
Coupled to this, their was also a drop of 25 per cent in the number of mortgages being issued in the country, the biggest drop since 2004, while the value of the deals concluded fell by four per cent.
The bulk of the transactions in the market, some 52.4 per cent recorded by INE were for second-hand homes, where the decline in activity was sharpest, at some 35.6 per cent.
The drop in sales of the remaining 47.6 per cent of new homes was 14.6 per cent.
However, it is not only those in the domestic market who are likely to suffer as demand goes into freefall.
Research from the Spanish Ministry of Housing (MVIV) reveal the number of property resale transactions to foreign buyers fell by almost 18 per cent from quarter two of 2006 to quarter two of 2007.
These, the latest figures available, show transactions were down from 21,628 to 17,815.
More specifically, a significant drop in figures was recorded in the Spanish capital Madrid, where resales to foreigners declined from 3,496 in 2006 to 1,562 in 2007 - a drop of 55 per cent.
A similar story was reported from the Castilla La Mancha province, also in central Spain, where a drop of 44 per cent occurred during the same period - falling from 692 in quarter two of 2006 to 388 in the second quarter of 2007.
Commenting on the markets fortunes Martin Dell, managing director of property portal Kyero.com, said: "Even though these figures from the MVIV are now almost nine months old and have their limitations, it's the first time that this data has been made available to the public.
"It confirms the scope of the downturn in the number of property purchases by foreigners in Spain."