Spanish housing prices to fall 30 percent by 2011: BBVA
Spain’s second-largest bank revises down its forecast of housing prices from 25 percent to 30 percent.Madrid – Housing prices in Spain will fall nearly 30 percent between 2008 and 2011 before they start to recover from the collapse of a property boom, Spain's second-largest bank BBVA said Tuesday.
In its last forecast for the sector six months ago, the bank had predicted housing prices would drop by 25 percent over the same period.
On Tuesday it forecast housing prices would fall by 10 percent this year and 12 percent in 2010.
"The lowest level of prices has not been reached yet, it will probably be reached at the beginning of 2010. It is reasonable to think that the bulk of the adjustment will have taken place by 2012," BBVA chief economist of Europe told a news conference.
There are about 1.2 million unsold homes in Spain, a nation of some 46 million people, according to BBVA which said this number will rise further.
Six months ago the bank estimated there were about one million unsold homes.
Spain's economy, the fifth-largest in Europe, entered into recession at the end of 2008 as the global financial crisis hastened a correction that was already underway in the construction sector.
The slump in the building sector spread to other areas, pushing the unemployment rate to 17.4 percent in the first quarter of 2009, the highest level in the 27-nation European Union.
The plunge in housing sales also led to a 3.2 percent drop in house prices in 2008, according to government statistics. But some sector specialists put the fall in prices last year at up to 8.8 percent.
AFP / Expatica