Spanish house prices fell at their fastest pace on record in the first quarter, after new house prices dropped for the first time, and analysts saw double-digit declines ahead as unemployment spirals.
Home prices fell 7.6 percent between January and March compared to a year earlier, marking 12 months of decline, after a 5.4 percent drop in the fourth quarter of 2008, the National Statistics Institute (INE) reported.
“It’s possible we see declines slightly above ten percent this year,” said Pep Ruiz, head of real estate research at Madrid’s AFI consultancy.
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Mortgage lending and house sales have collapsed in Spain, formerly one of Europe’s hottest property markets, after unemployment topped 18 percent, by far the highest rate in the European Union.
Aggravating Spain’s property problems is chronic oversupply after it built more homes than Britain, Germany and Italy put together at the height of the boom in 2007.
Supply and demand are out of kilter with one in six people out of work, debt defaults up fourfold in a year and at least 600,000 new homes sitting unsold in Europe’s most over-stocked property market.
Spanish banks and builders are so desperate to get rid of homes they are offering bus tours of defaulters’ property being offered at half price or less. See story [ID:nLQ422110].
Spanish bank BBVA does not see a recovery in house prices until 2012 given forecasts Spain will be the last economy in the European Union to exit recession, probably in 2011, due to the twin shocks of the global crisis and a housing boom collapse.
