Houses prices in Spain have declined between 3.7% and 5% over the last 12 months to the end of September. The Tinsa index also declined 5% year on year in September after it was down 4.6% in August and 4% in July.
The average price per square metre is now €1,832, down from €1,903 last year, according to the Ministry of Housing.
The coast saw the sharpest decline in prices—the region is down 8.7% in September after being down 4.9% in August. Popular holiday locations like Alicante on the Costa Blanca and Malaga on the Costa del Sol have been particularly hard hit, with prices down around 20%. The situation is slightly better in the Balearics and the Canaries, down 4.2% in September after dropping by 5.3% in August.
After reaching the peak price of €2,590 per square metre in December 2007, prices on the coast are now down 25.7% at €1,924 per square metre.
Price falls have accelerated in the third quarter of the year. The economy’s chances of recovery depend on the last quarter of the year, says Mark Stucklin of Spanish Property Insight. “The big question is why are price declines accelerating again, especially when the latest property sales figures show a strong rebound in transactions?” he says. “We have to keep in mind that it might be just a temporary anomaly lasting a few months , after which prices return to an improving trend. You can never be sure with just three months of data. But more likely it shows that average Spanish property prices have still not fallen enough, and vendors are having to give more ground to find buyers.”
The falling house prices come at the same time as high unemployment and a record number of repossessions continue to dampen the outlook on Spain. In the first quarter of 2010 alone, there were a record 27,561 repossessions procedures, already following an increase of 126% in 2008 and 59% in 2009. Banks have now repossessed an estimated €20.5 billion of property .