House Prices Fall For First Time In Decade, news and forums Spain

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House Prices Fall For First Time In Decade,


Spain’s massive property boom is now officially over. That’s according to Friday’s edition of El Pais, after the Housing Ministry announced that house prices fell in the first quarter of this year in real terms, the first drop since the surge in the housing market kicked in over a decade ago.

The new numbers show that on average, house prices rose in Spain in 2007 by 4%, and that number is half a point lower than the current inflation rate in the country of 4.5% which is at a 13 year high.

The news comes with the arrival of the new Minister for Housing, Beatriz Corredor, and oddly meets the previous government target to reduce speculation in house price rises, and to see increases in line with general inflation. However, this has been achieved in the climate of a sharp down turn in the sector, and now a more generalised fall of house prices is feared, which could in turn establish the nightmare of negative equity for some mortgage owners.

Some pessimists even claim that the down turn has been sharper than official figures indicate, while optimists say that new constructions have not been affected. The INE (National Statistics Institute) says that house sales reduced in number last year by 36% for resale housing and by 15% for new properties.

The previous time that house prices fell in Spain in real terms was in the 90’s when the loss of value lasted for some seven years.




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