House prices rise 9.1pc – lowest increase since 2000

http://www.expatica.com/actual/article.asp...;story_id=35664

19 January 2007

"MADRID – House prices rise 9.1pc in 2006 – the lowest increase since 2000, indicating a clear deceleration in the construction sector.

The increase is 3.7 points lower than the rise in prices for 2005, according to figures released by the Ministry of Housing on Friday.

It is the lowest increase in house prices since 2000.

The average price of property is now EUR 1,990 per square metre.

The fall in house price rises was most noticeable in 'second hand' properties or homes which are not brand new. These make up the majority of the market.

They rose 8.6 percent last year – almost 13 points less than in 2003. New flats went up 9.6 percent.

A spokesman for the ministry said: "The process of deceleration is most evident if we compare the prices and how they changed last year."

The same official report says that prices in Malaga rose by 9.9% last year.
I just happen to live in Malaga, and let me tell you these figures are pure propaganda -I wouldn't be suprised to see that they were issued by "The Spanish Ministry of Truth". Prices did not rise in Malaga, last year, they in fact fell, and this happened in an environment where real inflation is at a level of between five and ten percent.
Hundreds of thousands of homes stand empty and unsold for years on end because sellers are asking silly prices. Why does this happen? Because Spain is not a developed market economy like we have in the UK. The Spanish people consequently don't understand that prices can go down as well as up. The people that really want to sell are lowering their asking prices, and many still don't succeed in selling. Repossessions are kept off the open market by a cartel of estate agents, lawyers and bank managers, but I think it will soon come to a point where they can't absorb any more themselves.
When summer sales dissapoint, and the ECB hikes twice by September (according to euribor futures market), there will be bargains to be had come the end of the year.
Spain, with it's enormous current account deficit, and single reliance on the strength of the building industry is a timebomb wiating to explode!!!

btw, abn amro announced today that it expects the ecb to hike rates up to 4.5%!!!

Hello Forestfire

Still waiting to buy a place in Spain? Unfortunately I think you may be waiting a long time.

Hope you are enjoying life out in the Sun though.

I acknowldge this. Idid not realize how huge the prices in Spain are. Even if they fall 20%-30% they will still be very high.

I`m with you FF. Seeing exactly the same over in Cadiz.

Hello AdiBrown,
Thank-you for your concern that I may have to wait a while to buy a house. Last time I remember you were worried that I was too poor to afford one.
That you have such concern for someone that you don't really know from Adam, goes a long way to restoring my faith in the human race.
Let me assure you on both fronts, because I don't want you losing any sleep; Firstly, while I have not joined the jet set, I do not have to beat the ballifs back to get at my front door. Secondly, as a clever man such as yourself must surely know, patience is of the essence when getting involved in the property market, and I am very patient with regard to buying a house in Spain.
I very much enjoy living in Spain, and am looking forward to having yet another quiet summer here -it is so much better than it was say five years ago -even in the height of summer, the roads, beaches and the restaurants never get busy. There is nothing worse than a stampede of tourists for us residents, but I think that those days are behind us.
& when the quiet summer is over (which has been accompanied by a quiet property market), and interest rates have risen, maybe even more mayors and property developers have been put behind bars, I think that the sellers may develop a degree of desperation towards the end of the year. So thank-you so much for your concern, but I think there is a very good chance that by this time next year I will be living in my own home in the sun.
Warmest regards to you and yours.

Dont get me wrong I rent and have no desire to buy here in the UK whilst prices are sky high. I fully agree that patience is a virtue that will pay off in the long term.

I am sure you do enjoy living in Spain as it is a great place to live, I lived there myself for quite a few years and as you know bought a house there about 6 years ago. I am still young and it was bought cash so intend to just sit on it and live in it some time down the line, I have no desire to sell, flip or whatever so my position on prices is "couldnt care less".

IMO the HPC in Spain started late 2004/early 2005. Around this time I noticed in certain areas people were finding it nigh on impossible to resell their villas/apartments. Certain areas continued to sell but these were simply late comers to the HPI in Spain and were undervalued to start with.

I've seen a steady trickle (but nothing more than this) of houses selling around my area and this I suppose can be put down to general emigration from the UK which is set to increase rapidly as Baby Boomers hit retirement age over the next 5 - 6 years. I also see a picking up in the market as the first signs of HPC in the UK appear, lots of people will be looking to escape with their equity and cash in.
On the other side of the coin I notice lots more people are now renting in Spain rather than buying much like you are doing and in fact I have rented my house out now for just over 3 years and have people in it at the moment looking to rent for another 2-3 years. This is great for me because I get my house looked after and maintained and at the same time make some pocket money. Another thing I have noticed is the large numbers of new builds being built everywhere. There is a tendancy for the Spanish Developers to over supply the market and this has happened as it did in the eighties. What is important in my opinion is the location and many of these new build flats/villas are in poor locations inland or behind other developments. In the Costa Del Sol especially it as always been important to buy on the beach side of the main coast road otherwise you will never sell and your house will be dead money. The key to buying in Spain is that First line properties are everything. Anything more than a mile from the coast is over priced.

I think Spain as you know will always be the area of choice when it comes to retirement. The all year round weather, beaches, culture and proximity to the UK along with cheap airfares make it perfect. Spain gets a lot of bad press but it is like water off a ducks back, the odd horror story is just that and nothing compared to the hundreds of thousands of people really enjoying their retirement out there. The image of union jack short, tattooed boneheads drinking at a British Bar is only really true of the Costa Blanca and a few areas of the Costs Del Sol. Everywhere else I have found to be if anything more exclusive than France or Italy.

Forestfire go get yourself a Rioja, throw some gambas and a dorado on the barbie and chill out. Im sure people will realise the only way to sell is by dropping their asking prices at some time and hopefully then you'll get the price you are looking for. Good luck to you.