Further drop in Spanish property prices expected

Spain's Central Bank has said it expects prices of property in Spain to continue to fall as the housing market tries to correct itself.

A report in The Olive Press revealed that the average value of homes in the nation has dropped by 15.4 per cent since the first three months of 2008, according to figures published by the Bank of Spain.

Speaking to the publication, Jose Luis Malo de Molina, director general of economics, statistics and research at the institution, commented that "the correction in prices has still to run its course".

He added: "There are between 800,000 and 1.1 million unsold properties, which continue to exert pressure on prices."

The oversupply in the real estate sector was cited as a major contributing factor to Spain's economic difficulties by the central bank's governor Miguel Fernandez Ordonez in a statement to a parliamentary committee earlier this month.

However, he stressed that a decline in development is helping to balance the market while further steps have been taken to consolidate Spain's public finances.
 

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