Property prices in Spain – everything is going according to plan
Property prices in Spain fell in 2012. Real prices, adjusted for inflation, fell by 33%, while nominal prices fell by 24%. This means that prices are at the level of 2002-2003 and half of the growth seen during the construction boom has disappeared. The property market is under pressure from various factors and prices continue to fall.
One of the main factors affecting property prices is the high unemployment rate. Many citizens cannot afford to buy property because of the risk of losing their jobs. Banks also have problems issuing mortgages because they themselves are experiencing financial difficulties and cannot spend much money on investments.
The fall of the Euribor index and the increase in the tax burden on property purchases are also putting pressure on prices. The Spanish government is reforming the association of agencies authorized to assess real estate in order to revive the rental market and stimulate the renovation and construction market. However, the large number of unsold apartments is also putting pressure on prices.
Experts predict that in the near future, property prices in Spain will not fluctuate much. The increase in taxes will not lead to an increase in prices, since the factors that contribute to a decrease prevail. However, in the long term, everything will depend on how the Spanish authorities manage to solve economic problems and on the interest of foreign investors, including from Russia, in the Spanish property market.
