Spanish house prices slump 8.5% in a year

Spanish property prices have slumped by 8.5% over the past year – a €23,000 drop in average asking prices, according to online property portal Kyero.

With asking prices falling from €267,000 to €244,000 in just a year, 25% unemployment and tough financial problems, local sales have dried up.

However, cash buyers are jetting in from countries within a short flight time of Spain – especially from Scandinavia and Northern Europe.

Rush for the sun

Kyero have looked at the reasons behind this Nordic rush for the sun and come up with some conclusions to explain what is going on:

  • Strong local economies in countries like Norway and Sweden, means there are funds available for investment
  • Traditional, in-country investments are producing modest gains
  • Strong local currencies gives Scandinavian buyers even more leverage when buying property in Euros
  • Reduced property prices in Spain helps mitigate the currency and property market risk

“These four factors, combined with cold local climates and close proximity to Spain are, we believe, driving the recent surge of Scandinavian buyers in Spain,” said a Kyero spokesman.

Property roadshows

Meanwhile, tourist chiefs and developers from the Costa del Sol are actively encouraging visitors from Sweden. The roadshow has recently visited Germany, Bulgaria and Russia in a bid to stump up interest in tourism and the property market.

The majority of second homers around Malaga are Swedish – with a sprinkling of Norwegians, Finns and Danes.

During 2011 the number of Swedish visitors reached nearly 120,000 in the province of Málaga, which represents a 41% year-on-year increase.

Homes at 1992 prices

The roadshow is also targeting Britain in the hope of clearing an oversupply of 30,000 unsold homes along the Costa del Sol. The Spanish sales team will also take in France and Germany.

Meanwhile, the bank Banesto has sold 3,170 homes in the past six months at discounts of up to 80% off market price.

The average three-bedroom home sale price was €61,115.

In March, the bank put 4,600 properties up for sale across Spain at an average price per square metre of €638 euros, equivalent to the price of a home in Spain in 1992.