Average price of new homes falling

New house prices still falling
New house prices still falling

The average price of new housing in provincial capitals in Spain is still falling showing a decline of 5.5% for the year up to June 2012.

The drop represents a cumulative fall of 30.1% since the peak in 2007, according to a report from the Valuation Society (Sociedad de Tasación).

The main points of the report are:

  • The average price of new housing in the provincial capitals is €2,286 per square metre constructed. This transaltes into a price of €205,740 for a house of 90m².
  • In the provincial capitals the half-year price reduction (-3.8%) has increased from the last half of 2011, which was -1.8% and compared to the first half of 2011 which was -2, 3%.
  • The reduction in the average price over the last twelve months in the provincial capitals has been -5.5%, up 0.8 points on the previous year (2010-2011), which was -4.7%.
  • During the period January to June 2012 the average price of new housing has decreased in all capitals. This decrease is more than 5% in 23 of the capitals and between 0 and 5% in 27.

The capitals with highest prices per square metre are San Sebastian (€3,548 p/m²), Barcelona (€3,537 p/m²) and Madrid (€3,045 p/m²), with respective variations in the first half of -1.5%, -3, 7% and -4.6%.

The report suggests that the housing market is continuing to decline with little change to the stock of properties for sale which is being hampered by the general state of the country’s economy.

The housing market is suffering an important deceleration in productivity resulting from a significant reduction in sales volumes. This is most noticeable in tourist areas and in peripheral areas of medium sized towns.

Despite the falling sales figures the Valuation Society suggest there is still demand for housing but the “significant dependency” on the economic conditions and the difficulties financing a property purchase are likely to delay a full recovery for the real-estate sector.

The increase in supply of new homes for rent, in some cases with an option to buy, continues to be an increasingly popular option across Spain.

You can see the full report here (in Spanish): New Housing June 2012