How Have Home Price Trends Changed Since 2008?

16/10/2014 – El Economista

Average price of a home in Spain started to decline when the recession began in 2008. According to the latest official update on the topic by appriaser Tinsa, since 2007 the values plummeted by 41.7%.

The company estimates that the month of September saw a drop of 4.2% in comparison to the same month in 2013, precededed by a 4.3% depreciation in August, a figure raised by the General Council of Notaries to 8.6%.

As clearly observed, the pricing has been steering downwards since 2008 with a slight rise in 2010, showing no year-on-year improvement, though.

This September, the metropolitan areas (defined as the towns surrounding large cities) again performed best with decrease marking only 0.8%.

On the other end, there rank the smallest towns which were not included in the rest of the analyzed areas, registering a slump reaching 9.2% in year on year terms.

The Mediterranean Coast saw home values descending by 2.9% y-o-y, and in the Balearic and the Canary Islands properties became by 3.5% cheaper if compared to September 2013.

Light at the End of the Tunnel

The real estate market of Spain started to show first signs of revival. As per the data of the INE (National Institute of Statistics), from representing 12.3% of the Spanish GDP in 2007, the sector passed to having a shy 5.2% share in 2013. Both the institution and the Registrars see eye in eye when it comes to a slight (0.97%) rise in property prices in the second quarter of 2014.

At the same time, sales are said to improve by 10.7% in July, transacting 28.583 deals in total, after ten months of a negative tendency. Another report, the one prepared by the Notaries, reflects a 17.4% increase in mortgage approvals in July.

Besides, traditional buyers no more drive the market up as they were replaced by funds, family offices and foreign investors. Around 62% of July sales were paid in cash.

Credit risk rating agency Fitch predicts that the stabilization of the home value and the mortgage granting observed now in Spain confirms economic recovery and return of lending. The firm rules out sharp rise in prices, though.

 

Original article: El Economista

Translation: AURA REE

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