House prices to continue falling over next three months

Prices still falling
Prices are still falling

According to the ‘Real Estate Confidence Index’ for the third quarter, drawn up by the Evaluation Society (Sociedad de Tasación), based on the opinions of up to 700 experts in the sector, housing prices in Spain are expected to fall further for at least the next three months due to the deteriorating economic situation and the drop in sales of apartments.

This latest report notes that this downward trend in prices will affect “virtually all the regions in Spain”. However, it points to a situation of “stability” in the ‘stock’ of homes, a trend which will “also be maintained over the next few months”.

This is the Society’s forecast for the next three months and explains the drop in the real estate confidence index from 31.8 points in April to 31.2 points from a possible 100 in the last estimate.

“This development is a clear reflection of the degree of distrust that exists right now in the market” said the Society, while pointing out that 50 points would be a situation of neutrality or stability in the market.

As far as second residences are concerned, the outlook is “the most negative of all those which have been analysed in the study,” although it improved almost two points over the first quarter of 2012.

Other results suggest that confidence in the development of promotions and building plots is again negative and even falls two points over the second quarter to 26.5 points. Moreover, with regards the sale of commercial premises, the third quarter of 2012 is likely to continue with a negative outlook.

The Evaluation Society noted that the real estate economic confidence index varied “slightly” in all areas of the country. The communities whose outlook most improved over the first quarter were Asturias, which advanced 6.7 points, followed by Cantabria (+2.4 points) and Murcia (+2.3 points).

By contrast, the Balearic Islands’ confidence index dropped 5.6 points, breaking with the rising forecasts for the previous quarter. The same was true for Castilla y León (-3.3 points) and Galicia (-3.2 points).

Looking at some of the variables, with regard to pricing, experts gave an assessment of 24.1 points to Catalonia, the lowest of all, while forecasting an upward swing in La Rioja, with 39.5 points.

Finally, El Mundo reported that normal home sales expectations are lowest in the Basque Country (27.5 points) and highest in Extremadura (41.7 points), a trend that worsens with second homes, with confidence being lowest in La Rioja (19.8 points) and highest in the Canary Islands (29.5 points).

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