Spain gets new property index

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by Gill Montia

Official figures from Spain’s National Statistics Institute show that house sales in the country fell by 26.3% in the 12 months to the end of July; mortgage lending declined 33.2%, to €10.2 billion, during the period.

Predictions that the Spanish property market will crash and warnings of the impact of this on the country’s wider economy have been plentiful since the spring.

However, the July figures show a slight slowdown in the rate of decline of both mortgage lending and sales compared with June, when house sales fell 29.6% and mortgage lending plummeted 40.6%.

According to Spain’s Housing Ministry, house prices fell by 0.3% between April and June, although in July, the APCE, an association of Spanish property developers, reported that house prices had fallen by 15% since September of last year and analysts estimate that the market remains overvalued by around 30%.

This summer, one of the countries biggest developers, Martinsa Fadesa, declared itself insolvent, blaming an oversupply of properties and rising borrowing costs for its demise.

The news was followed by reports that in some regions over 50% of the new homes built in the past three years are unoccupied.

From October, the slide in Spanish house prices will be tracked by a new property index.

Statistics are currently supplied by Spain’s Housing Ministry and critics claim that they do not reflect the full extend of the downturn.

The new index will initially provide quarterly data but aims to publish figures on a monthly basis in the near future.