Newly built Spanish properties drop 4.7%

The average price of new housing (non-subsidized) fell 4.7% in the first half of 2011 year on year and 2.3% since December 2010, according to a report by “Sociedad de Tasación”. On average, the price of new properties in the provincial capitals of Spain stand at 2419 euros per square meter in June, with the average 90m2 house valuing at 217,710 euros.

All regions experienced declines in Spanish property prices with the exception of the Basque Country, where it rose 4.9%. The biggest drops were in Aragon (8%), Balearic Islands (6.8%), Extremadura (6.6%), Murcia (6.3%), Cantabria (5.7%), Andalusia (5.6%) and La Rioja (5.5%).

In the case of the provincial capitals, the price of new housing rose in Pontevedra (0.9%) and Zamora (0.3%), while it remained constant in Palencia and Badajoz and fell in the rest of the provinces. The capitals of provinces with the highest housing prices were Barcelona (3,720 € / m2), San Sebastian (€ 3,615 / m2) and Madrid (3,240 € / m2), while the lowest were in Murcia (1,387 € / m2), Badajoz (1,389 € / m2) and Cáceres (1,405 € / m2).

‘Drastic’ reductions in new developments

The study predicts that the coming months will absorb significant surplus of the new housing stock, since there is a potential demand, but it depends on the economic situation and the possibilities of financing. The revival in the pace of sales will be “gradual” and “slow” and will come hand in hand with lower prices from developers, although it is “closely linked to its ability to support their level of indebtedness.”

Given these supposed “drastic” reductions of new promotions, recovery of the sector will still be dependent on the absorption rate of the stock, which is uncertain due to the high rates of unemployment, economic uncertainty, tightening credit requirements and of course lack of demand for certain areas.

The report indicates that the ongoing restructuring of the Spanish financial sector can have a significant impact on the housing market because it affects mainly the institutions traditionally associated with mortgage lending. .

Andrew Bellés

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