The sale of completed houses for January 2008 dropped 27 per cent, compared to a year earlier, according to recently released figures from the National Statistics Institute (INE). The total lending to home-buyers fell almost 28 per cent. The value of the average mortgage was down 3 per cent to €142,794, despite higher financing cost.
The figures are for the first time based on the change of ownership of properties, which are said to be the most telling confirmation of the economic downturn in Spain. The government has promised to step up public works in attempt to offset the housing downturn.
The credit crunch is also driving a growing number of small and mid-sized developers and builders into temporary receivership. The Madrid-based property group, Cosmani, has become the latest to seek court protection from creditors, as slowing sale has limited its ability to meet monthly interest payments. The housing construction group, SEOP, went into administration last week after its clients stopped paying their bills.
Sales of homes and apartments suffered the biggest decrease in January 2008, according to INE. The sale was down more than 35 per cent to 32,400 units, compared to a year earlier. The sale of new homes in January 2008 slipped almost 15 per cent.
According to some analysts, the figures reflect only partly the reality, as they exclude some sale of off-plan homes. Citi Group has estimated in a report that these were down by as much as 60 per cent at some companies, compared to a year earlier. Citi Group forecasts a 25 per cent decline in net profits this year for Realia, which is one of Spain’s biggest listed property groups.
The tourist hotspots of Spain have been hardest hit. Residential estate developments in some parts of the Mediterranean coast are now take an average of four years to sell, compared with a few days at the height of the property boom four years ago, according to a report by the property consultant firm Aguirre Newman. About half of the new apartments on the Costa del Sol are sitting unsold, it says.