Spain Real Estate News

Spanish mortgage lending dropped 37.4 percent year-on-year in March, taking new loans to the lowest level seen in records dating back to January 2003, National Statistics Institute data showed on Tuesday.

March mortgage lending fell to 6.244 billion euros ($8.72 billion), the institute said.

The decline was slower than the 47.5 percent fall from a year earlier in February. However, the data still showed lending was only about a third of the level recorded at the beginning of 2007, at the height of Spain's decade-long property boom.

Economists say Spain's property and construction industries reached unsustainable levels during the bonanza years, when building accounted for up to 18 percent of gross domestic product.

This was made possible by ready funding available on foreign bond markets for Spanish banks, which then passed on the money to house buyers in Spain. This finance has dried up, making banks much less ready to lend and undermining the cycle of ever-increasing property prices and investment which made Spain outperform other euro zone economies for years.

Spanish gross domestic product (GDP) shrank 1.9 percent quarter-on-quarter in the first quarter, the country's worst contraction in half a century, due to the twin shocks of the global crisis and a housing collapse.

The average value of mortgages fell 13.3 percent in March from a year ago, the National Statistics Institute said, providing another sign of falling prices in a housing market which saw values triple in a decade.

Spain is struggling to become more competitive and to find new industries to fill the gap left by construction. (Reporting by Jason Webb; editing by David Stamp)

There is no let up in the property price crash in Spain as the latest figures to be published show that in some areas, particularly the Costas, the downward trend continues.

Spanish property prices fell by 10% over the 12 months to the end of April, the figures from the property price index published by Tinsa, one of Spain's leading appraisal companies, shows.

Coastal areas were the hardest hit where the high concentration of second homes has meant that the market has seen a large decline in the number of foreign investors. Average prices in coastal areas fell by 13.5%.

Big cities, including Madrid and Barcelona saw the next biggest drop in prices, down an average of 10.3% and the Balearic and Canary islands saw a much smaller fall at 9.2%.

An examination of the yearly figures shows an up and down pattern. Large cities have seen a steady decrease in prices which dropped 1.9% in April 2008 and declined every month until April 2009.

The Mediterranean coast has seen prices zigzag – down 1.2% in April 2008, down 8.3% in august last year and seeing similar large price drops in October and November. Then the steepest decline came in December (-14.3%) and January saw prices fall 12.6%. There was a slight slowdown in the decline in February (-10.7%) but that has climbed again to -11.5% in March and -13.5% in April 2009.

Prices in the Balearic and Canary Islands initially bucked the trend seeing a 1% and 1.4% increase in April and May last year but began falling in June. The rate of decline has been steady since then and reached a peak of -9.2% last month, the year on year figures show.

With the number of foreign property investors declining the government is now trying to encourage Spaniards to buy more property but it latest measure has been criticised as rash. Mortgage relief for borrowers with incomes of €24,000 or more is to be eliminated in 2011. This is supposed to encourage people to buy sooner rather than later.

But developers have criticised the move calling it 'negative' and opposition leader Mariano Rajoy described it as an attack on the interests of the middle classes.

Source: PropertyWire

 One out of four russians interested in purchasing property abroad during the first quarter 2009 focused their search on Spain, according to the Russian property consulting firm Miel DMP, which specializes in property abroad.

The company cites the collapse in the real estate market in Spain as the main cause for the surge in interest for the Spanish property market, which has resulted in some properties being cheaper than in Bugaria and Montenergo.

Spain has become the most popular location for Russians eyeing property abroad, after France (20 per cent), and Bulgaria (15 per cent).

Source: Spanish News