Brakes On Falling House Prices In Spain

House prices in Spain are still falling more than seven years after values started to drop following the financial crisis.

Property valuation web site Tinsa reckons the average home price was 2.8% lower in March 2015 than 12 months earlier, although the drop is slowing.

In February, the year-on-year fall was 3.6%.

Since the start of the downward spiral of home prices, the average residential property in Spain has lost around 41% of value.

Thousands of properties repossessed from developers and homeowners by banks remain unsold and available at bargain prices.

Some real estate agents are offering homes with 100% and up to 15% cash backs to cover buying costs and taxes.

Bottoming out

The Balearic Islands have fared better than the capital Madrid and coastal towns. Prices have fallen by around a third on the islands, 45% in Madrid and almost 50% for coastal communities.

Housing experts believe the plunging market may finally bottom out this year, although prices will take a long time to climb back to their former levels due to a glut of homes for sale and a lack of ready buyers.

“How the market fares can depend on a lot on other factors, like the growth of the economy and employment,” said a spokesman for the firm.

“It’s too early to say that prices have stopped falling, but it is fair to say that we believe the bottom of the market is within sight.”

Moderate market improvement

Eurostat, the official European Union statics web site released figures showing a 0.2% year-on-year increase in Spanish property prices during the last quarter of 2014, compared to a 1.1% Eurozone average.

Homes for sale portal Kyero greeted both sets of figures, stating that realtors felt a moderate house price recovery was on the way.

Meanwhile, rents showed a small dip, with an average nationwide fall of 0.5%, according to the Spanish National Statistics Institute.

The organisation published figures showing that rentals slipped by just 0.1% from a month earlier.

Rents in Spain have followed a downward trend for around two years.

The data varied between regions, with the largest falls in Murcia (-2%), La Rioja (-)1.6% and Navarra (-1.25%).

However, increases were reported in Melilla (1%), Catalonia (0.3%) and the Balearic Islands (0.1%).

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