Share
MADRID: Home prices in Spain must fall 27% more before values become attractive and the glut of 1.5 million residences begins to be absorbed, according to Aguirre Newman, a Madrid-based property consultant.
“Current home price estimates do not reflect true market values,” Javier Garcia-Mateo, director of analysis and investigation for Aguirre Newman, told reporters today in Madrid. “Banks and real estate companies that own or have financed unsold new homes will have to accept price cuts of around 27%.”
Spanish house prices have declined 9.5% since their peak in March 2008, according to Spain’s Housing Ministry. The country accounted for 29% of home construction in the European Union from 2001 to 2007, while representing 9% of the region’s population.
Aguirre Newman estimates that there are 612,500 new unsold homes in Spain, 384,050 under construction and 520,330 existing residences that remain empty.
The housing slump tipped the economy into the worst recession in 60 years, and Spain’s unemployment rate is the highest in the EU. Home sales fell about a third in the 12 months through September, the latest government data show.
Real estate companies including Martinsa-Fadesa SA have filed for protection from creditors in the past 18 months after falling behind on debt repayments when the market collapsed.
Banco Santander SA, Spain’s biggest bank, together with its consumer unit Banco Espanol de Credito SA, has 4.1 billion euros (RM22.26 billion) of property assets after acquiring real estate from failing developers. Banco Bilbao Vizcaya Argentaria SA has said it expects to end the year with 1 billion euros of real estate after accepting property in exchange for canceling loans. -- Bloomberg
SHARE
