Decline in Spanish house prices slows
On Tuesday official data issues showed that Spanish housing prices eased their slide in the fourth quarter of 2009 but analysts say an oversupply of homes still weighs on prospects for a recovery in the key sector.
The National Statistics Institure (INS) say home prices fell 4.3 percent as compared to other years in the fourth quarter, an improvement from the 5.6 percent decline in the previous quarter.
Spanish house prices fell by 0.4 percent in the fourth quarter over the previous quarter figure of 0.9 percent.
But while housing prices were down overall, prices for older homes inched up 0.1 percent in the fourth quarter over the previous three-month period, the first increase since the fourth quarter of 2007.
Spain’s property sector, a main source of jobs and vital to gross domestic product, collapsed at the end of 2008 as the global credit crunch pulled the plug on a decade-long boom in the sector.
The collapse of the property bubble plunged the Spanish economy, Europe’s fifth-largest, into its worst recession in decades and caused the unemployment rate to soar to nearly 19 percent, the second-highest rate in the EU.
In January BBVA, Spain’s second largest bank, warned that the ” the glut of houses on the market remains significant and will force prices to drop even further.”
The bank estimated that housing prices have fallen by around 10 percent from the peaks reached in 2007 but said they could fall by as much as 30 percent.
Spain’s housing boom was built on low euro zone interest rates, strong population growth thanks to the arrival of five million immigrants since 1996 and speculative buying of secondary residences by both Spaniards and foreigners.
Many economists argue euro zone interest rates were set too low for Spain causing a housing boom; the European Central Bank looked mostly at the situation in Germany and France, the euro zone’s biggest economies.
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