Home-owners in Spain received yet another blow when figures released by the National Statistics Institute (INE) show that house prices fell even further in the last quarter of 2011.
House prices in Spain have been in free-fall since the start of the economic crisis with the construction industry coming to a virtual standstill. The figures show that the price of new build properties dropped by 8.5 percent in the final quarter of 2011 compared to The equivalent period in 2010. Those trying to sell their used homes are suffering even further with a drop of 13.7 percent.Analysts are blaming the recession, unemployment and uncertainty about Spain's economy as major factors, according to a report in El Pais. Property expert Julio Gil said:
“We have been surprised at the magnitude of this down slide. We thought it would be around 10 percent.”With more and more people defaulting on their mortgages, the banks are being left with huge stockpiles of homes that they can't sell, even at knock-down prices, whilst the immigrants from Northern European countries that helped create the property boom in Spain have all but disappeared. This is the worst quarterly drop since the INE started recording the statistic, with Madrid the worst affected region.
The Wall Street Journal reports that Spanish banks now hold "more than €400 billion worth of loans to the construction and real estate sector, " an amount that is equivalent to 40 percent of gross domestic product for Spain. Early figures show that the price drop is continuing in this first quarter of 2012.The personal tragedies behind the stark figures are very sad. An action group, called 'Stop Desahucios', has been formed to try and stop people being forcibly evicted from their homes. With unemployment rising at an alarming rate, many more people are finding themselves unable to pay their mortgages and discover that the banks are less than sympathetic to their plight, despite the fact the banks are overloaded with properties they can't sell. The action group try everything to help the families and if that fails they literally stand in front of the homes preventing officials from getting in to evict the families, many of whom have small children.Many foreigners with homes in Spain, whether permanent or holiday, just hand in the keys to the bank and head home leaving huge debts behind them.What is certain is that property prices in Spain will continue to spiral downwards and it will be some years before the property market begins to recove