MADRID: Spanish home prices fell for a seventh quarter in the three months through June as mortgage lending contracted and the worst recession in 60 years pushed up unemployment.
The average price of new and used houses and apartments declined 0.4% from the previous quarter, when they fell 2.7%, the National Statistics Institute said on Sept 30 in an e-mailed statement. From a year earlier, prices dropped 7.7%, with the price of new homes falling 3.9% and existing houses declining 11.2%.
House prices more than doubled in the decade through 2007 amid falling interest rates and economic growth averaging almost 4% a year. The market had already started slowing when the global credit crisis hit, slashing lending, pushing real-estate companies into bankruptcy and leaving more than a million new homes unsold.
Spain, home to 11% of the European Union’s population, built more than 29% of all new homes in the EU from 2001 though 2007. That increased the number of unsold homes to as much as 1.6 million and outstripped annual demand of 218,482 units, according to R.R. de Acuna & Asociados, a property-research company. The excess supply will take six or seven years to be absorbed, the company’s president Fernando Rodriguez de Acuna said on Sept. 15.
The economy has been contracting since 2Q2008, pushing the unemployment rate to 18.5% in July, and the Organization for Economic Cooperation and Development expects Spain to take longer than other European countries to recover from the recession. The number of mortgages issued for houses fell 19% in July from a year earlier and housing sales declined 20%, according to separate data from INE.
Standard & Poor’s forecasts Spanish house prices may fall 20% this year, followed by declines of 10% and 5% in the next two years, it said June 24. -- Bloomberg LP
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