Holiday home owners brace for 50pc price drop in Spain
SPAIN's property slump will deepen for much of the next decade, and tracts of buildings along the Mediterranean coast will have to be demolished, the country's top consultants have warned.
RR de Acuna & Asociados expects home prices in Madrid, Barcelona, and other major cities to fall a further 30pc in a relentless slide until 2018, but it may be even worse in sunbelt regions where thousands of Irish people either live or own homes.
Fresh losses could reach 50pc and drag on for 10 to 15 years in those places where construction ran wild during the bubble, bringing the total decline from peak to trough towards 75pc.
"The market is broken," said Fernando Rodriguez de Acuna, the group's vice-president. "We calculate that there are almost two million properties waiting to be sold. We have made no progress at all over the last five years in clearing the stock," he said.
"There are 800,000 used homes on the market. Developers are sitting on a further 700,000 completed units. Another 300,000 have been foreclosed, and 150,000 are in foreclosure proceedings, and there are another 250,000 still under construction. It's crazy."
The overhang is vast for a country with 48 million inhabitants and annual demand near 200,000. It is coupled with an outflow of workers and the start of an ageing population crisis.
The government says the housing market has already "touched bottom" after falling 30pc since 2008, even though premier Mariano Rajoy admits that there will be no economic recovery until 2014.
The International Monetary Fund forecasts contraction of 1.3pc next year, while Citigroup and Nomura both expect the depression to continue into 2014. The unemployment rate is 26.2pc and rising.
In his end-of-year assessment, Mr Rajoy said the country's crisis had been worse than anticipated.
"We are facing a very tough year, especially in its first half," he said. "Spain's economy will remain in recession for some time, but we expect it will improve in the second half of 2013," he added. (© Daily Telegraph, London)