Housing Prices Fell by 7.8% in 2013, Linking Six Years of Adjustment

Property Valuation Society has been the first to make public the housing data summarising the year 2013. And it turned out to be surprising, given that most of the experts have been predicting all December long that the prices of houses will keep dipping down, however, less intensively than they did in a couple of years before the real estate bubble burst. In fact, just the contrary happened. In 2010 the average price of a new house decreased by 3.2%, in the next three years the prices depreciated by 4%, 6.9%, 7.8% respectively. Thus, the average price of a square meter in 2013 marked 2.039 Euros, around 183.500 Euros for a flat of 90 square meters type, which is supposed to rewind to the level from 2004.

In balance with the past exercise, the valuers make it clear that the real estate market has not hit the bottom. “In 2014, the new house supply will remain important, despite the considerable reduction in the number of the constructions started. The recent break of the investment funds into the Spanish real estate market can contribute to the speed up in the absorbtion of the already finished stock, accompanied by certain revival of the sector” – they conclude. Appetite comes with eating, however the one of funds having tried the great discounts (up to 96%) will not fight the bulk of new houses stock without buyers, which is estimated at around 584.000 houses by the Ministry of Development. That is why the valuers claim that the level of supply will continue to taper down until it adjusts to, still very low, the demand. (…) The underscore of decreasing prices will be smaller in big cities and areas under develepment.

Furthermore, the moderation in inflation seems “insufficient” to compensate the decline in the net income in significant number of families, pointing at forecasts that the number of rent-to-own homes will fall again in 2014 in reference to the previous years. “The effect will be worsened by higher unemployment rate and the job uncertainty haunting the people. Buying a house would require a great effort from families” – they add.

In fact, the statistics show how during the six years of fall the price of new houses diminished by 38,9% compared to its top level in 2007, transforming from between 2.905 and 2.039 Euros per square meter into mere between 1.453 and 2.905 Euros, still showing a downward tendency.

None of the autonomous communities is free from the drop-offs. The greatest reduction has been registered in Aragón, reaching 11.6%, while the slighest in Asturias, 2.5%. The data contrasts with the information provided by INE, according to which the new house prices rose in the third quarter by 0.7%, the first optimistic news since the second quarter of 2010 interpreted by experts as a turning point. Nothing could be further from the truth.

Source: Cinco Días