October 25, 2006
COMPETITOR: Property in Spain “best ever” investment
House prices in Spain have displayed the lowest rise in three years – 13.4% in the past 12 months. The initial sign of a predicted equity slowdown soared to 25% in the Costa Calida region in 2004. It averaged 18% in other second home coastal areas.
New figures for the average price per square meter for new and “used” homes between September 2004 and 2005 showed a slowdown which began in the long-time “boom” Spanish property market.
Director General of the Spanish Ministry of Housing, Rafael Pacheco said the rise confirmed the long-predicted slowdown had started and the government’s efforts to cool down the housing market had produced results.
Spain’s Socialist government fears a backlash if the property bubble bursts with millions owing tens of thousands of euros, which they will not be able to pay back. The price of “protected” or state properties rose to 5.7% in the past year, while the general index of property prices went up by 13.2% in the same period.In the past three months, house prices even showed a dip in some regions: sinking to 0.7% in Cantabria (north) and 3.6% in Extremadura (west) – areas not generally affected by the second home/ holiday market concentration in the Mediterranean coast.
In Andalucia, Aragon, the Canary Islands, Castilla y Leon, Madrid, Murcia, and Navarra, prices shot up by less than the national average of 1.5%.
With last quarter figures still to come, the slowdown is likely to produce a final annual equity growth over the 12% forecast by leading banks Caja Murcia and CAM Bank. These are expecting a similar 12% growth for 2006. Both are big investors in Spanish real estate development and mortgage providers to local and foreign buyers. These are also members of the newly formed SIPPS in Spain organization – composed of PropertyInSpain.Net, Travelex, Spanish lawyers, leading developers, and property valuers.
Posted on: Spain
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