Far from having reached their bottom, prices for new homes in Spain have speeded up their descent speed. In the first half of the year prices of new homes located in big and medium sized towns decreased by 5%, accumulating a descent of 27,6% since the beginning of the crisis. Without the effect of the inflation, the descent would reach 36,8%, according to the figures of the consulting company Sociedad de Tasación. This has been the most dramatic downfall of housing prices since the real estate bubble burst, in the second half of 2008, when it dropped 5,5%. The average price has reached 2102 Euros per square meter, similar to prices in 2004.
The descent of prices this year is against the opinion of real estate experts who declare that prices of the residential segment have reached their bottom and that Spain is preparing for the recovery. The report of Sociedad de Tasación is similar to the one issued by the consulting company RR de Acuña y Asociados, which advanced last week that prices would descent fifteen more years.
The figures of Sociedad de Tasación for new homes are referred to principal residences, of around 120 square meters and located in cities of more than 25.000 inhabitants. Should the report include second hand and secondary residences, subsidized properties, single family homes, big sized flats and all possible towns, then the descent of housing prices in Spain would reach 47%. The descent in this first half of the year for all Spanish properties reaches 17%.
The managing director of Sociedad de Tasación, Juan Fernández-Aceytuno, is cautious when it comes to predicting the future of prices in Spain: “we do not have a crystal ball and no one has one”, he declared yesterday. The executive described the current scenario of the real estate market, based on the ten factors that have an influence on housing prices. In reference to the demand, he indicated that the five main factors were: employment, lack of tax exemption, increase of VAT, the new rental law, and the negative balance in migration. The five factors which have an influence on the offer are: the available stock, the activity of Sareb and the real estate divisions of the financial institutions, the changes in the interest rates, the default rate and the lack of banking financing. “These ten factors will surely put downward pressure on prices”, he declared.
In his opinion, one of the most important dangers the sector is now facing is the possible future increase of mortgages if the Euribor rises, which is now at a minimum level of 0,5%. “The mortgages should be studied taking into account scenarios with higher interest rates”, he declared.