The decade-long boom for the property market in Spain has ended, with prices falling for the first time in many parts of the country.
In the country as a whole, prices inched up by just 0.3 per cent in the third quarter of the year, the smallest rise since 2000. But prices fell by 1.1 per cent in Valencia and 0.3 per cent in Alicante. The largest drop of 3.2 per cent was in Navarre, in the rainy north of Spain.
This week, the International Monetary Fund gave warning that the slide in house prices could turn into a rout in countries such as Spain, the UK and Ireland. Spain is viewed as being particularly at risk from a downturn. Like Britain, property prices have soared, doubling between 2001 and the end of 2006 and rising by nearly 60 per cent in the past two years alone, according to figures from Halifax, the bank.
But while the UK has barely expanded its housing stock in the past decade, there has been a construction boom in Spain, with about 800,000 homes a year being built recently. Analysts believe there is demand for only about 500,000 of those. The boom has slowed to a crawl, hurting the construction sector. Spanish construction companies began 140,000 new homes between April and July, a 15 per cent drop compared with the year before.
The Spanish Government yesterday played down fears of a crash. Rafael Pacheco, the Housing Director, said the figures showed that Spain was experiencing a “gradual and gentle landing for house prices. You cannot speak of a crisis,” he said.