EU says property overvalued by up to 17% in Spain
The European Commission has published a report in which it says that property in Spain continues to be expensive compared to the rest of the Eurozone. The quarterly report by the European Commission says that prices adjusted accordingly in nearly all Eurozone states by the end of 2009 except for in Spain where property prices at the start of 2010 continued to be overvalued by around 17%.
In its report the European Commission highlights what it calls ‘significant differences’ between European states in the rhythm at which prices are adjusting to the reality of market conditions. It says that ‘by the end of 2009 prices had gone a long way to correct imbalances in some member states but that there was still a long way to go in others’.
In fact the European Commission saw different tendencies in other member states to those seen in Spain. According to its report the cost of property is undervalued, especially in Germany.
The study says that between 1998 and 2006 property prices rose by an average of 4% a year in Eurozone states. This phase of continual rises was then followed by a period in which prices started to decrease at the end of 2007. The accumulated decline in prices in the third quarter of 2009 was found to be 8.3%.
Nevertheless, the European Commission recognizes that Spain is one of the countries in the Eurozone where prices have fallen the most with an overall drop of 18%. The only other member state where prices have fallen more is Ireland with a fall of 37%.
Related to house prices in Spain: