Spanish property prices finally seem to be stabilizing, and recently have even began to recover in more popular areas. Compared to the start of the downturn around seven years ago, prices are down by around 50% in many areas.
Tinsa, a leading valuation firm, has recently published its quarterly report containing data relating to the first quarter of this year. The report revealed that many Spanish properties have lost around half their value since the price peak of 2007.
The average loss of value across the country stands at 41.5%, putting Spanish property prices back where they were in 2003. However, naturally some areas have suffered more than the average rate of value loss, with around 50% of overall property values disappearing in some markets. Examples of markets that have seen almost half of property prices wiped out include Madrid (48.5%) and Aragon (49.6%), while Catalunya and Castilla La-Mancha have both seen values drop by just over 50%.
Overall, the biggest price drops have been in Zaragoza (52.8%), Girona (52.9%), Guadalajara (53.6%) and Toledo (56.8%). Meanwhile, the provinces that have weathered the seven-and-a-quarter-year storm best are Teruel (20.9%) and Orense (18.7%).
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With stability now approaching, some of the more popular Spanish markets already showing signs of a turnaround and forecasts leaning towards the positive, many investors are starting to see these drastic price drops as a potentially good thing. Prices are extremely low, comparable to those seen twelve years ago, yet many foresee plenty of possibility to benefit from recovery if they grab a bargain while they can.
For those willing to take the risk, this is an entirely valid strategy and has the potential to bring in some very good returns. However, it is important to note that the expected recovery is in its infancy at best, and in most of Spain has yet to arrive. Prices are, on the whole, still falling – albeit much more modestly than they have been. Indeed, Tinsa’s report shows that the rate of decline is decidedly slowing. Nationwide, the annual rate at which Spanish house prices are falling has slowed to a comparatively mild level of 3.1%.
Once again, there are naturally some areas that are ahead of the average, and Andalucía currently stands out as the region experiencing the quickest decline in prices. With poor performance in Granada and Malaga helping to drag the figures down, the region currently shows year-on-year depreciation of 4.1%. This does, however, still show deceleration in the rate of decline. Last quarter, the figure stood at a noticeably higher 5.6%, and a year ago the annual decline was 7.2%.
The region is made up of eight provinces, and naturally there is a fair amount of variation between them. Five of the provinces display annual value losses ahead of the national average, ranging from 4% in Sevilla to 6.2% in Granada. Jaen, meanwhile, matches the national average with 3.1% and Cordoba beats it with only 2.8% of property values lost in the past year.
The most impressive performance, however, comes from the near-stable Andalucían province of Cadiz. According to Tinza, Cadiz has seen a twelve-month fall in property prices of only 0.7%.