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alfathoughts: The price of housing in Spain is overvalued by 15 %, but could fall to 35%

Saturday, September 21, 2013

The price of housing in Spain is overvalued by 15 %, but could fall to 35%

The price of housing in Spain continues overvalued by at least 15 %, but could fall to 35% , according to a report by the Economic Situation Observatory (CEO ) of the Instituto Juan de Mariana on housing prices and rents .

The OCE first calculated in 2007 the magnitude of the ' housing bubble ' in Spain and concluded that housing prices were overvalued by 40 % .

From the highest point of the ' bubble ' , housing prices have fallen new construction 24% , " so that if in 2007 it was necessary to adjust prices about 40 % lower in 2012 that margin would have been reduced by 15 %. "

According to the Institute , the " slow" price adjustment can be attributed largely to a "late , ineffective and misguided set of policies to hinder rather than accelerate this process ." For the center , the strategy followed by the banking sector is "particularly detestable " .

"Although progress has been made in this regard , the fact is that , on the one hand , are incomplete and , on the other, disappointing , for example regarding the Sareb " he asserted the institution , which considers that the ' bad bank ' seems to be having an opposite effect , " because instead of acting as a catalyst for market , accelerating the price adjustment , is serving to the contrary."

The CEO has highlighted in its report that the "slowness " of the Spanish setting contrasts with the "fast" setting other European countries also experienced ' real estate bubble ' as Ireland, where prices have fallen more than 50% from their highs .

Comment Gurus :

In respect of housing prices I recommend watching this video in which Borja Mateo ( an industry expert ) gives his opinion without mincing words about what you expect to happen to the price of housing in Spain

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