Spanish conveyance Solutions SpainToday saw the issue of the housing price index from the INE in Spain
2013 data
On a quarter to quarter basis the first quarter 0f 2013 dropped by 6.6% from the last quarter of 2012. In the second quarter the housing index showed a small drop of 0.8%, in the third quarter the first increase in over 5 years of 0.7%, and the last quarter prices dropped again by 1.3%.
In the third quarter of 2013 the small increase in property prices came entirely from an increase in the price of new properties. This has now fallen back in line with what is happening in the sale price of second hand properties.
Regional variations
The variation across regions is vast ranging from a total yearly decrease in prices of 15.7% in Extremadura down yet another quarter from the yearly rate of minus 14% for the third quarter to the Balearics where the fourth quarter showed a slight improvement with the yearly rate moving from minus 5.8% in the third quarter to minus 3.7% in the fourth quarter.
On a national level the decrease in prices from third quarter to fourth quarter moved from minus 7.9% in third quarter to minus 7.8% in the fourth quarter showing a small slowdown in the price decreases being experienced as an national average.
Variation in pricing of housing
The Variacion del Indice de Vivienda known as IPV was put in place as a reporting structure in 2007.
In 2007 the yearly growth was 9.8% but each year since then prices have fallen. In 2008 prices dropped by 1.5%, in 2009 this rose to minus 6.9% but fell back in its acceleration of decrease to a further 2% in 2010.
Since 2010 however prices have dropped by a further 7.4% in 2011, 13.7% in 2012 and for the full year of 2013 by 10.6%.
2013 was the second highest decrease in house prices since reporting began but the level of decrease did at least slowdown in 2013 in comparison to the year of 2012.
Why are prices still falling
Selling in Spain has been fraught with difficulties and 2012 saw many Banks take big hits on the price they were willing to sell repossessed property at and the same has continued throughout 2013.
The last couple of years have also seen private vendors and developers willing to take offers at significantly below asking prices as a more realistic attitude to what could be achieved to attract a sale was adopted.
As legal issues surrounding some new developments were ratified and legal protection for buyers strengthened under new urban plans, whole developments that previously could not be sold went back onto the market at prices well below the original marketed price to reflect the overall drop in demand and to help them sell quickly.
The total decline in house prices since 2007 is now at 41.9% as a national average.
Where are prices holding up the best and where are the largest drops
In general regions performing above the average are the tourist areas of Cataluña, Andalucía along with Islands of the Canaries and the Balearics.
Murcia the home of the large developments of Polaris World is the third biggest faller of all regions in Spain.
New builds versus resales
Whilst in previous years the price drop in resale’s was higher than the price drop in new homes since the second quarter of 2013 the two have come in line with each other meaning new homes have dropped by a greater amount than resale’s. This statistic could be because buyers in Spain are now looking at the resale market due to realistic pricing or could be entirely due to developers or Banks holding new developments bringing prices into line with what could be achieved in the second hand housing market.
2014
It is expected that prices will start to stabilize during 2014 but it may well be well into the second half of the year before we see this translate to any sort of recovery.
Strong exchange rates in countries not in the Euro, a easing of mortgage credit from the Spanish Banks, and the overall drop in prices are encouraging International buyers back into the market but any stabilization of prices or growth will be sporadic and will vary considerably from region to region.