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Spanish Property Market Update

There seems to be a lot going on in the Spanish property market at the moment. The third quarter of 2012 is over and the numbers are coming in, new reports are being published, some long standing trends are changing, the ”Bad Bank” is getting closer to being a reality, and so it goes on. We have covered some of the most interesting bits for you below.
Q3 2012 price trends

Top Spanish property portal, Idealista.com has published it’s report into the price trends for the third quarter of 2012. According to the report “the third quarter of 2012 closed with a drop of 1.1% in the price of the “second-hand” housing in Spain. The price in Euro/square meter, which closed in summer at 2013 euros now stands at 1,934 euros”. The report also mentions in it’s summary that prices in Spain’s three biggest regional capitals, Madrid, Barcelona and Valencia have fallen 0.9%, 1.8% and 3.8%, respectively.

Property price trends in Madrid Barcelona and Valencia

You can read the report here if you understand Spanish, and even if you don’t you can still see the relevant numbers for the regions that interest you most.

Growth of the Spanish property market

Several media outlets have reported that the Spanish property market has grown for the first time in 17 months. August 2012 saw an increase of 7% in the number of property transactions, year on year and 4% on the previous month. Predictably, this has unleashed a bout of frantic speculation about the beginning of the recovery.

We would suggest caution when making any such conclusions. Property sales typically drop-off in August as the country shuts down for summer. It’s a subjective observation but we know the market and August would be a very strange month for a recovery. It is likely that this increase is a result of the impending tax increases, from 4% to 10%, on new build property which will come into force at the end of the year. That said, as we reported at the beginning of September, there has been an increase in foreigners (both expats  and foreign investors), buying property in Spain which will have contributed to the trend.

These results may be a “blip”, but some reputable experts, such as Mark Stucklin at Spanish Property Insight, have begun to predict that prices have reached a floor and won’t fall much further. We will, of course, be watching what happens.

The Bad Bank

Talk about the Bad Bank continues. I think we have mentioned it in our last 3 or 4 blog posts. It seems that a lot of people are expecting big things. It’s impossible to know with any certainty at this point as the final structure isn’t yet in place. It seems likely that the organisation will have the greatest effect on the lower end of the market as those are the properties that the banks will prefer to offload. Some reports, however, point to the Bad Bank refusing to accept and property valued at under €100,000.

Whatever happens in the long run, the prospect of the “bad bank” does seem to be attracting some of the bigger players in the international property market. Spanish paper Cinco Días reported that a number of large property investment companies have been studying the market for some four years and are suddenly becoming more active. The American group, Kennedy Wilson, opened an office in Madrid recently.

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