Spanish Property Prices Retreat Two and a Half Years

Spanish property prices declined by 7.8% over 12 months to the end of the November, according to the latest monthly Spanish house price index published by Tinsa, one of Spain’s leading appraisal companies.

After the latest price fall, Spanish house prices are back to where they were between May and June of 2006, wiping out the capital gains of the last two and a half years.

House price declines are even more dramatic if compared to December last year, when Spanish property prices peaked. In the 11 months to the end of November, real estate prices fell 8.8%.

Once again, the most dramatic price falls were on the coast, where prices fell by an average of 8.5% over 12 months to the end of November (and by 12.8% over 11 months). Prices in the Balearics and the Canaries fell by an annualised 8.4%, a big increase on the 5.4% decline in October.

Meanwhile between 600,000 and 1 million new homes sit empty and unsold and property transactions in Spain are down by 70%.

Next year the number of housing starts looks set to fall dramatically. Developers forecast just 150,000 new homes to be built in 2009, compared to 250,000 this year and more than 600,000 in 2007.