Spain’s real estate could soon see price stability if the diminishing declines of the past year continue. After the prolonged market slump in Spain, first quarter sales were up from a year ago. However, recovery depends on the return of foreign investors, especially to absorb the oversupply of coastal vacation properties. See the following article from Property Wire for more on this.
The latest real estate figures on prices and transactions are giving some hope that the Spanish property market is improving but foreign buyers are still not returning to the country in any great numbers. Prices are still falling, but less with every passing month, according to the monthly house price index published by Tinsa, one of Spain’s leading appraisal companies.
Average Spanish property prices fell by 4.4% over the 12 months to the end of May. ‘If the Tinsa figures are to be believed, the rate of decline in Spanish property prices has been slowing since June 2009, when it peaked at -10.1%. If the trend towards smaller declines keeps up, average property prices will be stable, or even growing slightly before the end of the year,’ explained Marc Stucklin of Spanish Property Insight.
But he points out that the Tinsa figures are based on their own valuations, not actual transaction prices. ‘Most of these valuations have been paid for by banks and for several reasons they might not give a true picture of property prices. Nevertheless, they are interesting in what they reveal about trends, not to mention the valuations used by banks for mortgage lending purposes,’ he said.
The Tinsa figures show that prices have fallen the least over 12 months in coastal areas and the Islands, areas traditionally popular with foreign buyers looking for holiday and retirement homes. Prices are down 4.1% on the coast and 2.4% in The Canaries and The Balearics. On a peak to present basis prices are down 16.5% nationally, 21.4% on the Mediterranean coast, and 12.8% in the Canaries and the Balearics.
But for the Spanish market to recover it needs foreign buyers to flock back and there is little sign of happening at the moment. The latest figures from the Ministry of Housing show that non-residents bought just 513 holiday homes in Spain during the first three months of the year.
According to the Ministry transactions were up in the first quarter by just 1.5% and on a cumulative 12 month basis sales were down 85. Sales increased over 12 months in places like Catalonia, up 13,6%, The Balearics, up 7,9%, Asturias up 4,6%, Madrid up 4,5%, Valencia up 4% and the Canaries up 1,4%.
Prices fell by 22% in Murcia, were down 14.4% in Extremadura, down 10.3% in Castilla La Mancha, saw a fall of 9.5% in Andalucía, some 7.8% in Navarre, 2.8% in Cantabria and down 0.6% in Galicia.
Stucklin also points out that foreigners who are buying tend to be economic migrants from places like Morocco and Ecuador buying primary homes in or around Spain’s big cities.
‘They won’t help mop up the glut of holiday homes on the coast. There are tens, if not hundreds of thousands of holiday homes for sale on the coast that will need to attract foreign buyers in large numbers if the holiday home glut is to be dealt with anytime soon,’ he explained.
Last week a new report from Spain’s Property Registrars suggested that transactions are bottoming out, though it is still too early to declare a recovery under way. The number of property deeds of sale recorded in the property registry rose by 7% in the first quarter of 2010 compared to same period last year. This is the first time in several years that annualized sales have risen in a quarter.
The report cautions against declaring a recovery under way. They point out that temporary factors such as the imminent increase in VAT on home sales, and elimination of tax relief on mortgage payments, could be bringing forward sales and boosting the figures temporarily.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.