BBVA drops Spanish housing price projections

Today the BBVA, Spain's second largest bank and one of the largest Spanish mortgage lenders downgraded their forecast for property prices, with new expectations that a 30 percent discount on 2008 prices is now common and to be expected.

I don't think too many people involved in Spanish property will be surprised by their announcement, after all it is what we've been seeing on the street for several months now, but having a major bank confirm the reality is important. BBVA further announced that they don't see any pickup in the local market until 2011.

Here in Andalusia some properties are selling for 50% of their 2008 price, and talking to real estate agents in other parts of Spain I think this might be common for less appealing properties, but I doubt we'll see BBVA reduce their expectations further since in the mortgage market they are probably not exposed to these sorts of property.

What does this mean for buyers of Spanish property? At the moment not much. There is a glut of empty housing in Spain, BBVA estimate 1.2 million unsold homes, but this masks an deeper problem of around 2 million vacant properties not including holiday or summer homes.

Buyers should therefore take their time to find the right home, after all at these prices in a depressed economy, it is unlikely much is going to sell quickly. Premium properties entering the market at 25-30% discounts are being snapped up relatively quickly in desirable locations such as the costas, but inland we're not seeing any significant movement.

The Spanish property market is therefore a buyers market and looks to remain so for at least the next 18 months.