Fall in Euribor good news holders of Spanish mortgages

With inflation at an all time low it appears that the Euribor, the interest rate which is used the most for fixing mortgage rates, will continue falling. At present it is 2.9% (0.40 points above the official interest rate of 2.5%) but all indications show that it could drop even further.

The Euribor has gone from 5.24% in October 2008 to 4.35% in November and 3.45% in December 2008. In January it was 3.025% and now it currently stands at 2.920%
The forecast for lower interest rates are promising due to the likelihood of the European Central Bank lowering the cost of borrowing further in an attempt to reactivate European economies. Some experts predict that the official interest rate set by the European Central Bank will fall to 1.5% which could mean that the Euribor could drop to 2%.

However, the mortgage market is continuing to fall. For example, new mortgages conceded by banks and building societies fell by 52% in November 2008 compared to the same month for 2007 according to figures provided by the Bank of Spain

The number of mortgaged properties fell by 33.9% in October 2008 to 64,429 according to the National Institute for Statistics. This figure compared to September 2008 shows a fall of 1.1%. In addition the average amount for a mortgage fell by 10.4% compared to October 2007 to 135,202 euros. The total amount of capital lent by banks and building societies in October 2008 also fell by 40.7% compared to the same month in 2007.

Cheap houses for sale in Spain

New flat in Barcelona on sale for just 115,000 euros
Finding a flat on sale in Barcelona for less than 300,000 euros was unimaginable a year ago. However, it is now a reality because prices have fallen a great deal since 2007. For example Procam, which is a subsidiary company belonging to Caixa Catalunya, has put a newly built flat on sale for just 115,000 euros. The flat is located in the neighbourhood of La Sagrera, the area where the new AVE station will be situated and is 103 square metres.

In fact there are property bargains to be found throughout Spain at the moment. Caixa Catalunya has placed 3000 properties on sale throughout the Peninsula with discounts of up to 30%.

The discounts have been made principally by the property promoter Procam because of the lack of buyers or because many people who had planned to buy have backed out due to the lack of available credit. Some of the flats on sale are the result of repossessions.

During its first few days the web page showing the discounted properties has received around 1000 visits a day. Caixa Catalunya is also using its network of 1,200 offices to promote the discounted properties which include houses, flats, offices and properties for rent. In addition, Caixa Catalunya is also focussing its attention on large investors offering them the possibility of investing in properties both in Spain and abroad.

Like many other financial institutions the Caixa Catalunya created three subsidiary companies last year in order to manage its portfolio of properties - Gescat Habitatges, Gescat Solars and Activo Macorp.

EU report criticises Spanish urban development policies

PSOE and PP both criticize EU report on urban development in Spain

Spanish EU MPs from both the PSOE and PP parties have announced their intentions to present a number of allegations against a recent EU report on urban development in Spain in order to try and amend parts of the report which criticises urban development policy in Spain. The report is based on complaints sent to Brussels from the Comunidad Valenciana, Madrid and Andalucía. The report, which was presented by the Danish EU MP, Margrete Auken, alleges that nothing has changed in Spanish urban development policy despite the substitution of the regulatory law on urban activity (LRAU) with the Valencian Urban development law (LUV).

The report which was discussed in the European parliament yesterday criticises Spanish urban development policy and proposes a moratorium on all plans for urban development in Spain which do not respect the environment, amendments to the law and the establishment of compensation for land expropriated from individuals.

The polish EU MP, Marcin Libicki, criticised the presentation of the report and the subsequent debate because it was not attended by any representatives from the Spanish government. Libicki said that the government had rejected invitations to attend the debate which centred on the abuse of urban development in the Comunidad Valenciana, Murcia and Andalucía. The PP main opposition party said that members of PSOE had excused their attendance of the debate on the grounds that they did not have information on the dates of the debate given that the invitations had arrived during the Christmas break. In the end it was left up to the Environmental Secretary for Autonomous regions, María Ángeles Ureña, to defend Spanish policy on urban development. She assured members of the EU parliament that it complied both with European directives and Spanish law. No regional representatives from Andalucía or Madrid were present at the debate either.

The EU MP for PSOE, María Sornosa announced the intention of amending a number of paragraphs of the preliminary report which threatens to freeze EU funds destined for Spain if a number of allegations of abuse of the law are not successfully resolved. She considered that the moratorium against the report does not go far enough. She said that the threat to freeze EU funds would set a ‘bad precedent’. She also said that the paragraphs that place doubt on whether the right to property ownership is guaranteed under Spanish law should be omitted from the report.

The EU MP for the PP, Gerardo Galeote also announced a number of amendments to to correct the report which it considered to be biased. Galeote questioned the document in which the most serious cases of abuse of urban development in two run town halls run by PSOE did not appear.

Value of Costa Blanca property falls sharply

Sharp fall in property prices along the Costa Blanca

According to a report published this week by the property evaluators Tinsa properties along the Costa Blanca have lost up to 14.3% of their value since the beginning of 2008. It appears that this part of the Mediterranean coastline has suffered the most from the nationwide slump in the housing market and prices have fallen almost five points more than the national average.

The index for the Mercados Inmobiliarios also shows that in coastal areas have suffered the most from the problems affecting the property market in Spain although figures for the whole country were negative with falls of up to 8% in provincial capitals and larger cities, 9% in the Balearic and Canary Islands and 10% in other urban areas. Overall prices are down by 10% compared to those registered during the property boom of recent years according to the results of an economic study presented by the Organization for Cooperation and Economic Development (OCDE).

The sharp fall in the value of properties along coastal areas of Alicante comes after five years in which investing in bricks and mortar brought healthy returns. According to figures published by Tinsa in 2002 property prices rose by 21%, in 2003 by 21.6%, in 2004 by 20.7% and in 2005 and 2006 by 14%. In 2007, the first year of the crisis in the housing market, prices rose by just 5.3%. The sudden fall in the rise in the price of properties led to a slow down in the construction sector with fewer new properties being built and last year activity in the construction sector was virtually paralyzed. Construction along coastal areas has been especially affected due to the fact that many properties are destined to be second homes or for investment purposes only.

According to the OCDE activity in the property market is also slowing down in a large number of countries within the eurozone after several years of strong growth when prices in some countries rose as much as by 50% between 2002 and 2007. Prices in the US rose by around 75% during the same period. Nevertheless, the property market in the eurozone is believed to be less vulnerable than that of the US because it is not based on high risk loans.

The price of ‘second hand’ homes in Spain was estimated to be 2,154 euros per square metre at the end of 2008 which shows a fall of 3.2% according to Hogaria.net.
Specifically, prices have fallen in Tarragona by 15.9%, in Lugo by 12%, in Alicante by 11.7%, in Ourense by 11.4% and in Álava by 9.6%. Prices rose in Murcia by 7.7%, in A Coruña by 6.9%, in Jaén by 4.9%, in Vizcaya 4.7% and in Zaragoza by 4.4%.

Provincial capitals where prices dropped the most were Ourense, which saw a fall of 16.6%, in Palma de Mallorca prices fell by 16.3%, in Barcelona prices fell by 10,1%, in Córdoba prices fell by 8,6% and in León prices fell by 8,3%, while prices rose in Cádiz, Burgos, Salamanca, Murcia and Valencia.

The most expensive property in Spain is in Mallorca in Port d´Andratx. It is a 630 metre squared villa with five bedrooms, six bathrooms and costs 18.5 million euros. In the province of Alicante in the area of Vistahermosa there is also a 1,300 metres squared villa for sale at 10.5 million euros. Amongst other attractions the villa boasts a disco and spa.

Translated and adapted from an article in Diario Información

8.8 percent drop in property prices in Spain

According to a study by the property evaluator’s Tinsa, the price of property has fallen by 8.8% since 2008. A report published yesterday by Tinsa shows that property prices are now at the level they were in the first quarter of 2005.

The price of property in Mediterranean areas has fallen by 14.3% which is one of the sharpest falls registered by Tinsa while property prices in urban areas have fallen by 10.2% although in large cities property prices have fallen by slightly less at 8.1%. In other areas property prices have fallen on average by 6.6%.

On the eve of an announcement by the Ministry of Housing the figures published by Tinsa show the biggest fall in the value of property for several decades. Moreover, property prices have fallen for the 10th consecutive time and contrast with figures for 2007 when the price of property rose by 3.6% with respect to the previous year.

Dramatic fall in sales of second-hand housing in Spain

The sale of used housing falls by 43%

The slump in the sale of used housing in Spain has worsened over the last few months with sales dropping by 2.7 points to 43% in October 2008. In contrast the fall in the sale of new housing was just 8.7% which is an improvement on the previous figure of 10.8%. Nevertheless, according to figures published by the National Institute for Statistics, the property market has fallen in overall terms by 28% since January last year with 42,883 operations less than a year ago. These figures include operations for VPO properties (state subsidised housing).

The sharp fall in sales is partly due to the restrictions on lending by the banks from the end of 2007 onwards. The rise in unemployment figures has also added to the fall in property sales. The sale of properties fell under the 40,000 figure in January 2007 at just 39,201 sales which is one of the lowest figures ever recorded.

Nevertheless, the figures for VPO housing are even worse. Specifically in the figures for October showed that sales in this sector fell from 13 to 30% compared to the fall in private housing sales to 27%. However, the fall in the sale of VPO housing has less impact on the overall market given that it only accounts for 8.5% of the total operations.

Fall in Spanish housing market in 2008

Price of new housing fell by 6.6% in 2008

The price of new housing in provincial capitals of Spain fell by 6.6% in 2008. According to the Sociedad de Tasación it is estimated that the price of a square metre is now 2,712 euros.

According to a report by the Sociedad de Tasación property prices fell in all provincial capitals in Spain last year. Out of these 10 saw prices fall by more than 7% another 22 saw prices fall by between 5 and 7% and in the rest (18 in total) prices fell between 0 and 5%.

The biggest fall in prices was in Cádiz (11.9%) and Vitoria (10.5%), while the smallest fall in prices was in Soria (0.2%) and León (2.6%).