Property sales in Barcelona and
Madrid fall by 50%
A new report from Spanish
real estate consultants Forcadell reveals that property
sales in Barcelona and Madrid have fallen by 50%
this year compared to 2005. The report finds that
an excess of supply over demand in Spain’s
largest cities has lead to a slight fall in the prices
of resale properties, and that vendors are starting
to accept offers 15% to 20% below asking prices.
According to Gonzalo Bernandos of Forcadell 650,000
new properties will be built this year in Spain, whilst
plans to build 820,000 properties will be signed off
by architects. This means that in 2007 there will be
350,000 properties left unsold, adding further pressure
to the Spanish real estate market. Bernandos concludes
that “the slow down of property prices is now
a reality, and will probably get worse in coming years.”
More Spanish properties,
but less accessible than ever
A new report from an organisation
that monitors sustainability in Spain (Observatorio
para la Sostenibilidad de España – OSE),
reveals that 30,000 square metres are built every
day in Spain, and voices concern about the record
812,294 housing starts in Spain last year - more
than France, Germany and the UK combined. According
to Luis Jiménez – the director of OSE –half
of the new properties being built do not match real
demand for housing, and are built with speculative
criteria in mind. Jiménez also raises a concern
that, whilst there are more and more new properties
on sale in Spain, high prices mean they are increasingly
inaccessible to first time buyers like young adults.
Price of new homes
falls in Madrid
The price of newly-built
homes in Madrid has fallen by 7.2% over the last
year, according to a study by the real estate consultants
Aguirre Newman. The size of the average new home
sold in Madrid over the last year was 12% smaller
than before, and more sales took place in cheaper,
outlying areas, which explains why sales prices fell.
On the other hand, the price per square metre of
new property rose by 5.5% over the period, 10% less
than the year before, and just 1% more than inflation.
Euribor still rising,
Spanish mortgages getting dearer
Euribor - the rate used
to calculate interest payments for most mortgages
in Spain – started June on 3.37% and finished
the month on 3.51%. The average for the month, which
is the rate used to calculate mortgage repayments,
was 3.4% (to be confirmed by the Bank of Spain),
up from 3.308% in May. As a consequence, borrowers
with variable-rate mortgages in Spain will face higher
mortgage payments.
European Central Bank
raises base rates to 2.75%
The ECB raised Euro-zone
base rates in June from 2.5% to 2.75%. The increase
was expected by the markets, and had already been
priced into Euribor rates - the interest rate most
commonly used to calculate mortgage repayments in
Spain. The ECB has made it clear that more increases
in base rates this year are on the cards.
Spanish household debt
reaches 110% of income
The Bank of Spain has expressed
concern about the fact that Spanish households continue
to spend more than they earn, causing household debt
to rise to 110% of income. This ratio of household
debt to income is 10 points higher than a year ago,
and 20 points higher than the European average.
Cost of average Spanish
property now equal to 6 years of net salary
A new study by Caixa Catalunya – a
Spanish savings bank – reveals that the number
of years of salary required to buy an average Spanish
property rose by 45.5% between 2000 and 2005, from
4.4 years net salary to 6.4 years (for a new property
of 100 m2). Over the same period, the cost of an
average new property rose by 12.5% each year, almost
3 times more than average incomes, which only increased
by 4.5% per year.
Spanish property ladder
harder to get onto
The Spanish Mortgage Association
has warned that, due to higher Spanish property prices,
rising interest rates, and tougher lending criteria,
getting on the property ladder will get harder for
first time buyers during 2006.
Bank of Spain expects
higher interest rates to bring about orderly ‘correction’ in
Spanish property prices
In a recent Q&A with
journalists, Jaime Caruan – Governor of the
Bank of Spain – has argued that it is not entirely
clear that property inflation in Spain is cooling,
though he did concede there are signs that prices
are beginning to slow “un poco.” Nevertheless,
Caruan is convinced that overvalued Spanish property
prices will eventually be brought into line by rising
interest rates, though the correction will happen
in a gradual and orderly fashion.
12% of Spaniards plan
to buy a property this year
The Spanish financial daily ‘Expansión’ reports
that a new Europe-wide study by the consultancy TNS
reveals that 12% of Spaniards plan to buy a property
this year, shrugging off concerns about rising interest
rates, higher property prices, and increasing debt.
Only the Italians are more bullish about buying property,
with 14% of households planning to buy this year.
Figures for other countries are UK (9%), France (8%),
The Netherlands (6%), and Germany (3%).
1 in 4 new properties
in Spain are holiday homes
A new report from Grupo
I (III Estudio sobre la Vivienda Vacacional en España)
estimates that 1 in 4 new properties in Spain are
built as holiday homes, and 40% of these are bought
by foreigners. This means that 150,000 holiday homes
are built a year in Spain, of which 60,000 are bought
by foreigners, predominantly the British. The report
finds that demand from foreign investors has reduced
drastically, largely due to high prices. Nevertheless,
the report forecasts that prices for holiday homes
in Spain will increase by 9% in 2006, and 6% in 2007.
According to this report, the average Spanish holiday
apartment of 2-beds and 114m2 is 233,000 Euros.
© Mark Stucklin of Spanish
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