House prices fall in Spain

According to the Spanish Association of Property Valuers the price of new housing fell by 3% in 2010 and now stands at 2,476 euros per square metre placing the average price of a new flat at 222,800 euros.

The price of new housing fell by 2.4% in 46 provincial capitals and rose in 3 (Lugo, Palencia and Pontevedra). According to the figures provided by the Association of Property Valuers prices stayed the same in one province, (Ourense).

The biggest fall in prices was registered in Aragón (-5.8%), Extremadura (-5.2%) and the Balearic Islands (-4.6%). On the other hand prices fell only slightly in Galicia (-0.7%), Asturias (-1.4%) and in Navarra (-1.5%).

The average price of new housing fell by more than 5% in seven provincial capitals compared to 2009, prices fell by between 3% and 5% in 17 provincial capitals and in 23 provincial capitals prices fell by between 0% and 3%. In three provincial capitals prices rose by up to 3%.

The Association of Property Valuers emphasized that in 2011 the amount of housing stock available will continue to be significant due to the existing surplus housing stock still on the market and slow growth in the housing sector.

However it also said that there would be less availability of new housing in central areas of cities due to the lack of land and the reduced number of new houses currently under construction.

During the first part of 2011 house sales will continue to be slow and the fall in prices will continue until most of the surplus housing stock has been absorbed. According to the Association of Property Valuers the fall in prices will affect both first homes and second homes.

In conclusion the Association of Property Valuers believes that the amount of housing stock available will continue to decrease gradually. It also points to the disappearance of tax incentives for buying a house as a possible reason for a decrease in the current demand for housing.

In addition, it also says that house prices will be negatively affected if the current financial conditions for taking out a mortgage are maintained.