The Spanish property market is still in freefall as thousands of euros have been wiped off the value of homes.
Struggling expats and property investors are trapped with homes they cannot sell as the Spanish economy continues to crumble under the weight of a relentless recession, rampant unemployment and a savage austerity budget.
Official figures from the government’s National Statistics Institute reveal just 22,000 homes were sold across the country in November.
That’s a massive 16% down on 12 months earlier and the market still shows no sign of bottoming out.
This was the second biggest fall in the number of properties sold in Spain since the financial crisis hit in 2008.
Month-on-month, sales were down just over 4% from October.
Massive fall in prices
Spanish property prices have plunged at least 39% since their peak in 2007, according to official figures. Values dropped 8% in the year to the end of October.
Later, but unofficial figures from property valuers Tinsa put the December year-on-year price drop at 9.2% – up 2% from November’s 7.2% fall.
Tinsa reports Spanish property prices have plummeted more than 47% since December 2007 on the Mediterranean coast, nearly 44% in major cities and just under 30% on the Balearic and Canary Islands.
Generally, home valuations have held up better on the holiday islands than the mainland.
Homeowners and investors should be wary of official numbers from the Spanish government, which has been accused of undercooking the books in the past to put a better face on the true performance of the market.
Expats and investors who put money into Spanish property at the height of the market could be sitting in negative equity if they have a mortgage with a home worth at least 40% less than they paid.
Property in Spain is suffering from a number of problems –
- Some areas have disputes over ownership and title that complicate sales
- Banks have tightened the purse strings and are unwilling to lend while prices are still falling
- Unemployment and bad debts mean credit for many borrowers is too poor to raise a mortgage and they struggle with finding a deposit
- Developers have gone into administration leaving ownership of homes in limbo
Property dealers are trying to talk up the market as a good time for cash investors to jump in, but few seasoned investors will want to risk their money in a liquid market that could still have some way to fall.