Guest Commentary: Spanish House Prices Fall Another 2.8% in Q2 2012
According to Idealista, one of Spain’s largest real estate sites, home prices have fallen another 2.8% in the second quarter of 2012. The average price per square meter is now under 2,000 euros, at 1,956.
Prices dropped in almost all areas. The capital Madrid saw a drop of 2.7% during Q2, completing a drop of 23% from the peak seen in Q2 2007. Prices in Barcelona slid by 2.2%, completing a total fall of 31.1% from the peak in Q1 2007.
Prices fell by 3.4% in Q1 2012 and over 8% during all of 2011. So while prices fell at a slower rate in Q2, the falls have accelerated in 2012. The full details are here, in Spanish.
Spanish real estate saw a boom and bust: at the peak, Spain was building more houses that Germany, France and Italy combined. The collapse of the construction sector hit the economy very hard. With the current oversupply of homes, Spain’s cement consumption returned to levels last seen in the 60s.
The Spanish government is practically safeguarding the banks, but cannot do it on its own. It officially applied for a bailout program, but the full details haven’t been finalized yet. The announcement of the bailout contained at least 8 holes, and also the relative relief provided at the EU Summit is very conditional, to say the least.
One of the problems of the Spanish banking system is that nobody believes the banks – many home values haven’t been updated and many underwater mortgages aren’t acknowledged.
By Yohay Elam, Forex Crunch
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