Overbuilding in Spain causes further drop in prices

LAST UPDATED: 24 Jul, 2011 @ 09:10
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Overbuilding in Spain causes further drop in prices

THE Bank of Spain has predicted that house prices will continue to fall for the next two years.

According to official figures, house prices have fallen by an average of 15.4 per cent since the first quarter of 2008, which is a staggering 20 per cent after inflation.

But now, bank boss Jose Luis Malo de Molina has predicted prices could actually fall a total of 30 per cent in real terms before they start to bottom out at the end of next year.

“The correction in prices has still to run its course,” he said.

The property market is continuing to struggle with the over-supply of houses built up during a massive boom that turned to bust at the start of 2008.

“There are between 800,000 and 1.1 million unsold properties, which continue to exert pressure on prices,” added Malo de Molina. “We must draw lessons from this so it doesn’t recur.”

 

5 COMMENTS

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  1. …….. Buenas Dia Don Jose Luis, professional financial advisor of Spain

    The extinct DoDo knew this 3 years ago – sorry knew this when real estate prices started going up a staggering 20% p.a. in 2002 ? for absolutely no reason but greed of the opportunist Promoters, Bankers, Politicians and anybody how actually thought they deserve to be a millionaire within a year ………

  2. Good to see an honest, realistic assessment from the Central Bank Governor instead of the usual whistling in the dark stuff from real estate. Same thing in the US with the market having further to fall, but is artificially constrained by lenders holding back on foreclosures to avoid recognising shortfalls. Anyone buying in this market is over-optimistic – much safer to rent for the next 2 years at least. But I bought too soon…..!

  3. In parts of Michigan you can buy a detached house for less than $1000.

    I remember when the Savings & Loans (Building Societies equivalent) institutions went bust in 87-9, you could buy a beautiful detached house in New England for around $50/60K – we almost went over to buy. It was only the thought of health insurance premiums as we got older that stopped us.

    Buy in Spain or buy in the US – no contest, so many far more beautiful areas in the US.

    As Steve said banks in both countries do not wnat to trash their balance sheets – come to that same in the UK – 18% of all mortgages in serious arrears but the banks don’t want to foreclose.

  4. come on folks a head banker, who I assure you is not making peanuts, deserves your applause for telling you that 2 + 2 = 4 ? when he has been lying, telling everybody that 2 + 2 = 8 for years …….. ???? PLEASE

    btw- RE: the US real estate crisis: I hear that the banks in California have reevaluated and accordingly remortgaged properties after the bubble burst there ….. makes sense no ? take a 500 000 USD home – after the bubble burst this home now has a realistic value of say 380 000 USD – adjust the mortgage your client will (hopefully) be able to keep payments up – the market will recuperate at a faster rate because the banks don’t have to flood the market auctioning of reposed real estate …. the loss is still a lot lower then repossessing and selling cheap and I have no doubt will be written off duly ……. Spain wont do that, they will rather go down this alley of old world splendor telling everyone that all is A OK Carlos ….. wait till the Euribor goes up, bound to happen or inflation will become a problem ……. uppppps 97% of mortgages in Spain are not fixed ????! Now take the high unemployment, an antiquated uncompetitive labour market, a general characteristic lack of competitiveness in the service sector (apart from Germany the only EU future industry) an income that is not adapted to deal with these too high and rising mortgages, the cost of living that is more and more reflective to richer countries in the North of the EU, next the Eu wont send money as they did in previous years, public opinion and other black holes wont permit that …… now do the math 2 + 2 = ??

    Gracias Euro ?

    This glass isn’t even half empty anymore but drying out at an alarming rate !?

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