It looks as if the prices of houses in Spain are at last starting to come down. Yesterday the Housing Minister, Maria Antonia Trujillo, said that latest figures published suggest that trends in the Spanish property market were starting to change.
However, Trujillo declined to make any concrete prediction regarding a possible drop in house prices, or to comment on the possibility that Spain may soon be experiencing the same sort of downward trend in property prices as that experienced by the real estate market in Britain. She measured her words very carefully – “It is true that certain figures (related to the property market) indicate change”.
The other day El Pais newspaper published an article about the future of the property market in Spain. The article said that most of the factors which caused the massive rise in prices experienced by the Spanish real estate market some years ago, have largely disappeared:
- The market is getting smaller because, unlike in the past, today betweeen 82 percent and 90 percent of Spanish families are home owners
- Economic growth in Spain is slowing down
- Spain will soon cease to receive funds from the EU cohesion funds
- Spanish families are more in debt than they used to be, and have less and less capacity for getting further into debt
- More houses are built in Spain than in all the other countries in Europe put together (according to El Pais)
- There are more than 3 million empty new homes in Spain.
Many of these may come onto the market when their owners realise that prices are about to come down, which will lead to an excess of supply and will further bring prices down.
- The government is going to start limiting planning permission. According to the Minister yesterday, during the past 20 years whereas land dedicated to property development has fallen by 20% in the rest of the European Union, it has risen in Spain where 25 per cent more land has been developed – more than in the whole of Spanish history.
- The Spanish government wants to limit real estate speculation and mass construction, preferring instead to encourage the rehabilitation of old buildings and to give incentives to people renting property.