The cost of property in Spain will be decreasing for a long time

Property in Spain: How to sell 1.5 million of homes?

The property market in Spain is experiencing hard times. Because of unemployment in the country the number of transactions on sale of real estates has dramatically reduced. As noted by Bloomberg referring to the Spanish consultancy RR. de Acuña & Asociados, Spain will need at least 6 years to sell from 1,2 to 1,5 million of new homes - a supply which is now available on the market.

Today Spain has one of the highest levels of unemployment. About 20% of Spaniards are jobless, which in fact is 2 times higher than in 2008. Particularly high unemployment exists among young people under the age of 25 - a key group in the property consumer market in Spain.

Building boom on the Spanish market, which took place from 2001 to 2007, has made this country one of the largest developers in the EU. Beginning with 2000, Spain introduced annually 700 000 new housing units. This figure exceeds the volume of construction in Germany, France and Britain combined. Most actively built up areas were Costa del Sol, Costa Blanca, Mallorca and Tenerife. Nowadays property on the Costa del Sol and Costa Blanca depreciates faster than in other regions.

Active construction of housing in Spain has led to a significant excess of supply over demand, resulting in a surplus of 1.5 million homes on the real estate market.

At the same time August 2010 in Spain was active. Housing sales have increased by 30% while reducing the price for 3.4%.

Anyway, the Spanish analysts say that in the next five years, the value of property in Spain will continue to fall. During the next 5 years specialists of RR. de Acuña & Asociados forecast the decrease for 20%.

Date: 19/11/2010