[MADRID] EXISTING home prices in Spain were little changed last month, the first month without a decline in three years, according to Fotocasa.es and IESE Business School.
The average price for a house was 1,890 euros (S$3,136) a square metre compared with 1,891 euros in December, Fotocasa, a Spanish real estate website, said in a survey published last Wednesday. The annual decline was 9.9 per cent. Homes in Madrid, Spain's capital and financial centre, rose 0.3 per cent to 2,965 euros a square metre, 57 per cent more than the national mean.
Spanish property developers have waited years for signs of recovery in a market that ravaged their business for new homes and led to write-downs and a restructuring of the nation's banking industry. Average home prices had fallen for 36 consecutive months, losing more than a third of value from an April 2007 peak, Fotocasa said.
"It's still a very illiquid market, and there aren't many deals going forward at these prices," said Hugo Navarro, a money manager at BPA Global Funds in Madrid, which invests four billion euros. "The real price, where sales can happen and that would be reflected in official valuations, is still about 20 to 25 per cent below these levels."
Government efforts to revive Spain's broken housing market will be endangered by new regulations on mortgage lenders, Moody's Investors Service said last week.
Economy Minister Luis de Guindos said on Jan 30 he wants to stop banks using mortgages of more than 30 years as collateral in covered bonds that package the loans. With the longer-maturity debt making up 10 per cent of the mortgage market, the rules would restrict home financing and hurt existing covered bonds, Moody's said.
Loan delinquencies in the mortgage market rose to 3.5 per cent at the end of September, the highest in at least six years, according to the Spanish Mortgage Association.
The Murcia region had the biggest price gain at one per cent and the largest drop was 0.9 per cent in Cantabria. San Sebastian in the north, Spain's most expensive city, saw values decline by 0.4 per cent in the month and 12 per cent in the past year to 4,588 euros a square meter.
The data released by Fotocasa is analysed by IESE Business School, according to the report. - WP