Expats on the Costa Blanca selling up

House sales by foreign residents in the Valencian Region rose by 45% in 2009

According to figures published by the Valencian Association of Notaries house sales by foreigners rose by 44.9% compared to the previous year. At the end of last year there were 4,291 house sales by foreigners compared to 2,939 in 2008 the year when the economic crisis in Spain began. The increase in house sales by foreigners also occurred at the same as a drop in demand by foreigners looking to buy property in Spain. Although there were 5,631 house sales to foreigners last year this is 43.9% less than in 2008 when over 10,000 house sales to foreigners were recorded.

Over the last 10 years there had been a sharp increase in foreign buyers, mostly from the United Kingdom and Central Europe. However recent statistics suggest that because of the economic crisis and the falling value of the pound, there has been a sharp down turn in British expat interest in buying property in Spain and in particular the Valencian region. In fact the number of transactions carried out by foreigners (buying and selling) fell last year from 17,377 in 2008 to 14.136 which is a decrease of 18.6%.

The figures provided by the Valencian Association of Notaries include both private and state subsidised housing (VPO).

One surprising finding is that the number of transactions between foreigners stayed more or less the same in the Valencian region. In 2008 there were 4,398 such transactions rising to 4,244 in 2009.
In the rest of Spain the number of transactions by foreign residents fell by 20.8% in 2009 from 77,273 in 2008 to 61,137 in 2009.

Price of housing in Spain falls

Price of housing fall by 4.3% in 2009

The price of housing went down by 4.3% in 2009 compared to a year earlier when house prices fell by 5.4% representing a slow down in the fall of property prices in accordance with the Housing Price Index (IPV) published by the National Institute of Statistics (INE).

The general fall in the price of private housing began in the second quarter of 2008 and reached its maximum a year later when prices plummeted by 7.7%.

In 2009 the IPV fell by 7.6% in the first quarter, 7.7% in the second quarter and by 7% in the third.

The slow down in the fall of house prices in 2009 was mainly caused by the drop of 3.5% in the price of used housing, almost five decimal points less compared to the previous quarter when prices in this sector of the housing market fell by 8.3% and nine decimal points less since the maximum fall in house prices in the first quarter of 2009.

The price of new housing fell by 5.1% which also represents the first slow down in the fall in prices for this sector of the housing market since the first quarter of 2007.

All regions of Spain experienced falls in property prices at the close of 2009 except for Extremadura where the price of housing went up by 1.9% and in Murcia where prices stayed the same. Prices rose by 3% in the city of Melilla.

Property prices fell by above the national average in Navarra (8.3%), the Basque Country (7.1%), Catalonia (7%), Aragon (6.8%), the region of Madrid (6.6%), Cantabria (6%), the Balearic Islands (5.6%) and the region of Valencia (4.9%).

In the following regions prices fell by less than the national average - La Rioja (3.1%), the Canary Islands (2.5%), Castilla y León (2.5%), Castilla-La Mancha (2.1%), Andalucia (1.7%), Galicia (1.5%) and Asturias (0.5%). Prices fell by 1.7% in the city of Ceuta.

The IPV does not include state subsidised housing (Vivienda Protegida Oficial) or variables such as the price of a square metre or the number of transactions carried out all of which are taken into account in the figures published by the Ministry of Housing.

The different references used by each organization partly explain why figures differ between the Ministry of Housing and the INE. Figures for the Ministry of Housing show that house prices fell by 6.3% in 2009 to 1,892.3 euros per square metre which is a the biggest fall in prices since records began.

In order to compile its statistics the INE collates information provided by the General Board of Notaries on deeds signed in person in its offices in the Peninsula while the Ministry of Housing bases its figures on data supplied by the Professional Association of House Valuers (ATASA).

Debts of property developers in Spain

Spanish Banks expected to make losses over money lent to property sector

Yesterday Javier Gómez Navarro, the Chairman of the Chamber of Commerce, said that banks and building societies in Spain would not recover 30% of the money lent to the property sector, estimated to be 97,500 million euros. According to the Spanish Mortgage Association (AHE) property developers owe a total of 325,000 million euros to financial institutions - half of which corresponds to loans taken out for the purchase of land.

Gómez Navarro explained that ‘it would be difficult’ to know when the rest of the money would be recovered. In relation to the losses suffered by estate agents he said that losses would not be recovered by construction companies because prices were not dropping.

At the end of January the president of AHE, Santos González, said that banks and building societies did not have the capacity to take on the debts incurred by the property sector which means that not only is viability of this sector at stake but also places the financial sector in a dangerous situation. Elena Salgado, the Minister for the Economy said that the government did not have any plans to help out financial institutions if estate agents did not honour their debts.

In his analysis of the Spanish financial system, Navarro said that it did not want to recognise that it has been affected and insisted on the need for capitalization. He also warned that time was running out for it to take advantage of the approval by Brussels of the Fund for the Ordered Restructuring of Banks which was only in place until 30th June this year.

In his forecast for the first quarter of 2010 Navarro said that many banks would go into debt due to falls in their income as a direct consequence of the fall in the Euribor.