Spain property prices fall at slowest pace for three years as market enters recovery phase

Price corrections abound throughout Spain's recovering property market

Property prices in Spain fell by the smallest margin since the end of 2010 in the second quarter of this year as the market continued to show signs of a recovery.

In the three months between April and June, house prices in Spain fell by just 0.8 per cent, which is the smallest drop for almost four years and a sure sign that the country’s five-year-long property malaise may soon be over…

Since the latter part of 2007 – at the very apex of the property market boom – property prices have risen only once on a quarterly basis, with every other quarter signalling sharp price falls as the market corrected itself in response to a Europe-wide economic crisis.

Averaged out over the past 12 months, property prices have fallen by 12 per cent, which is the smallest fall since the end of 2011 – a further signal that recovery has begun to take root.

“I think we’re likely to see further price falls, but it does seem we’re starting to see some stabilisation,” said Nicolas Lopez, analyst at Madrid brokerage M&G Valores.

“I don’t think prices are going to rise again soon, as we’ve seen in the UK, because here we still have an enormous stock overhang. For every person buying, there’s ten selling. Prices will remain stable for three or four years until that balance returns.”

Since the middle of 2007, property prices in Spain have fallen by an average of 36.7 per cent, according to figures released by the INE. In some regions, however, price reductions have exceeded 50 per cent.