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Falling prices in Spanish real estate sector

Stagnation in the housing market in Spain in the second quarter of 2011 encourages owners to lower their prices to get rid of unsold properties.

According to data published by the INE (Spanish Institute of Statistics), the prices of private property in the second quarter declined by -1.2% compared to the first quarter and reached a level of – 4.1%, and the whole year – 6.8%. This fall, the lowest since mid-2009 when prices fell by – 7.7%, confirms the general trend of decline in prices recorded in the year 2010 in the first quarter of 2011.

The largest price decrease – 8.3%, secondary real estate concern, while the prices of new homes fell by -5.2%. The largest price decrease occurred in Extremadura – 7, 8% and Madrid also – 7, 8% where the number of sales fell by 50% in the second quarter. In Andalusia fall in property prices in the second quarter amounted to – 5, 6% (-4.3% previous quarter), according to a report of the Ministry of Development, which also confirms the average drop in real estate sales transactions in Spain fell by 40% during this period.

Foreign investors are waiting for one of the most important meetings of the real estate industry in Spain under the name SIMed, which is considered an indicator for the real estate market in Costa Del Sol. It is also an opportunity to find out about current offers and enjoy the occasion.

Good news for investors

Good news for all who wish to purchase a new property in Spain.In the second half of August the Spanish government approved abill to reduce the charge VAT (called IVA in Spain) for the purchase of new housing by half – from 8% to 4%. These activities are part of a package of economic measures to reduce the large amount of unsold real estate. Reduction of VAT will apply for four months – so you have to hurry with the purchase.

The ongoing financial crisis has hit hard in the Spanish and the government had taken steps to increase sales of new homesacross the country. The real estate sector remains stagnant since 2007, causing the massive discounts banks offer mortgages withup to 100%. Potential buyers only pay taxes and expenses, which amount to a total of approximately 12% of the purchase price. Reduction of IVA (VAT equivalent) of field is a wonderfuland unexpected gift for potential property buyers.