Overseas property owners living in Spain will take some comfort in the fact that official figures reveal that Spanish property prices are slowing in decline. The decline in values of Spanish property fell at a slower pace in the first quarter, dropping 4.5%.
The reality of the housing market in Spain is that the troubled market is still some way from turning positive.
Property owners in Spain have seen a year-on-year decline in the first three months of the year, according to data released by the Housing Ministry. Property prices were falling by a record rate of 8.2% in the second quarter of last year.
Meanwhile, the National Statistic Office last week reported a 7.2% rise in February home sales against the prior month and 18.7% on an annual basis. It was the second straight month of gains after a rise of 2.1% in January.
Spanish property specialist Kyero.com described the country’s official house price index as “ridiculous” claiming that everyone in the business knows that average prices have fallen more than reported.
The Spanish economy is still faltering with unemployment running at nearly 20% the financial markets will worry over Spain’s ability to finance their debt as it emerges from recession.
The government’s medium-term plan is to reduce the deficit to 3% by 2013, in line with its commitments under the European Union’s Stability and Growth Pact. In order to achieve this, it plans a fiscal adjustment of nearly 10% of GDP.
Economists and financial markets believe the deficit-reduction goal may be far too ambitious, considering how deep the recession — driven by a collapse in the housing and construction market — has been for Spain.
