Resale asking prices dropped another 1.1pc in August, according to the index published by Idealista.com, a leading Spanish property portal, based on the 160,000 properties listed for sale in its database.

In other words, average asking prices fell from 2,365 €/m2 at the end of July, to 2.339 €/m2 at the end of August.

As always, there were regional variations, with prices falling in 13 autonomies, but rising in 4. Asking prices rose the most in The Balearics (+2.3%), followed by Navarre and The Basque Country (+0.2%), and Andalusia (+0.1%). Prices fell the most in Catalonia (-2.4%), Murcia (-2%), and La Rioja (-1.6%).

The dearest and the cheapest

At least judging by asking prices, i.e. what vendors think their homes are worth, property is dearest in The Basque Country (3,531 €/m2), followed by Madrid (3,261 €/m2) and Catalonia (2,732 €/m2).

At the other end of the scale, property is cheapest in Extremadura (1,388 €/m2), followed by Murcia (1,411 €/m2) and Castile-La Mancha (1,608 €/m2).

Not down enough

But judging by the volume of resales, vendors having dropped their prices enough, the latest fall notwithstanding. Though sales to the end of June this year are 20pc up on last year (latest figures available from the INE), they are 30% down on 2008, and 56% down on 2007. So at these prices, resales are less than half what they were just 3 years ago. Seems to me, average asking prices have further to fall.

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Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, has now risen for 5 consecutive months to its highest level in more than a year.

Euribor reached 1.421% in August, an increase of 3.5% on the previous month, and 6.5% higher than August last year.

As a result, borrower on annually resetting mortgages will have to start paying more. Repayments on a typical annually resetting mortgage (150,000 Euros, 25 years) will rise by around 6 Euros/month, or 70 Euros/year, to around 594 Euros/month.

This is the first time that Euribor has risen on an annualised basis since October 2008, when the credit crunch first griped the markets. Interest rates then tumbled as central banks poured money into the banking system. Rates are now starting to rise as investors fret about a fiscal deficits and inflation.

New mortgage lending

New residential mortgage lending fell 10.8% in June compared to the same month last year, according to the National Institute of Statistics (INE). This is the second month in a row that new mortgage lending has fallen.

New mortgage lending is a key indicator of spirits in the housing market. 2 months of declines is not a good sign.

There were 55,143 new mortgages signed in June, just a fraction down on May, so at least on a monthly basis the news was better. Accumulated over the first half of the year, lending was down just 0.5% compared to last year.

The average loan value in June was 119,547 Euros, up 1.4% on last year, and 4% higher than May, suggesting that banks are being more selective about who they lend to, but then lending more to those they do.

Overall new residential mortgage lending was 6.6 billion Euros, down 9.6% on last year.

The average interest rate was up a fraction on May at 3.93%, and down 12.1% compared to June last year.

Spain led the way for annualised growth, followed by the UK (+13.6%), and Poland (+10.2%). At the other end of the scale output fell 19.6% in Hungary and 17.5% in Bulgaria. The EU average was +3.5%.

On a monthly basis, Spanish construction activity was up 7.2% in June compared to the previous month. The Eurozone average increase was 2.7%.

Spain’s sharp rebound in June followed an annualised decline in May of -18.9%, reports the Spanish press. That just goes to show you can’t read too much into one month’s figures.

Spanish residential developers have responded to the figures with surprise and scepticism, saying output is no better than last year as far as they can tell. Benjamín Muñoz, Vice-president of the Valencian developers’ association, suggested there might have been some mistake.

The British community in Almeria, many of whom own homes declared illegal, are starting to make progress in their campaign to defend their homes from demolition, reports Spain’s leading newspaper El Pais.

They are fighting to save some 5,000 homes from the threat of demolition in a handful of Andalucian municipalities, mainly in the Almanzora valley.

There are an estimated 500 to 600 illegal homes in the Albox municipality alone, most of them owned by Britons.

Owners are represented by activist groups such as the Abusos Urbanisticos Almanzora No! (AUAN) whose slogan is “Campaigning to legalise homes in the Almanzora Valley.” The AUAN have organised protests and put pressure on the local and regional government, who have finally started talking to the AUAN about solutions. That is a step forward.

After years of blaming foreign buyers and threatening their homes with demolition, the regional government appears to be leaning towards an amnesty that legalises the great majority of homes.

Moving towards a solution

The Junta appears to be taking a softer line with the victims of planning abuses that the authorities should never have let happen.

Officials from the Junta say they do not want to “criminalise the situation” and are committed to finding a “transparent” solution and “consensus” over a road map, report El Pais.

The first step will be to measure the problem by auditing all the illegal building. Black spots such as Albanchez, Arboleas, Albox, Lubrín, Cantoria, Zurgena, Partaloa and Oria are planning to do this.

This will provide “a tool for town halls to understand the scale of the problem and how they can exercise their municipal responsibilities,” a regional official told El Pais.

About time too

It is the first time the regional government has taken into account the victims of planning abuses, and given them access to the process to find solutions, reports El Pais.

El Pais fail to make the point that, quite apart from the question of justice, the government’s behaviour has done untold damage to the region’s reputation as a home-buyer’s destination. This is all bad news for the local economy, which doesn’t have much going for it anyway.

But despite positive signs that the Junta might take a softer line, this saga is bound to last some time yet.

Perhaps the darkest hour came when the authorities demolished the home of British pensioners Len and Helen Prior in January 2008, even though they had planning permission from the town hall. Since then, dozens of other foreign-owned homes built on rustic land have been served with demolition orders.

Read the original article at El Pais online (Spanish): Los británicos de Almería ultiman su estrategia para regularizar 5.000 casas

Banana Beach, Marbella, one development that cannot be legalised.

The town council of Marbella has slashed the fine that developers will have to pay for legalising homes they built in contravention of planning permission, bringing the end of Marbella’s town planning chaos a step closer.

So long as the developers responsible for building some 16,500 illegal properties in Marbella compensate the town hall for legalising the properties, fines will be slashed by 75%. In most cases compensation involves donating land to the town council.

The decision to reduce fines was taken by the town council in early July, and complies with Andalucia’s regional planning laws (LOUA), argue the municipal government. Developers shouldn’t have to pay twice with compensation and fines, and anyway most can’t afford to do so, a council spokesman told the Spanish press. By that line of argument, smaller fines are better than nothing.

For example, the developer of the La Cañada commercial centre, Tomás Olivo, will have his fine reduced to 5.7 million Euros from of 23 million, plus ceeding 2 plots of land to the town hall.

Developers will welcome the news, but not necessarily all the conditions. They have to pay 25% of the fine up front, and provide a bank guarantee for the remaining 75% until compensation has been taken care of.

Developers that fail to meet all the conditions may be forced to demolish illegally-built property, if compensation and fines go unpaid.

The Ministry of Housing has sent a letter to 8,000 recipients of housing benefits for the young (RBE) ordering them to return the money received after the Spanish Treasury discovered they earned more than 22,000 Euros a year.

Under the RBE, young adults in Spain are entitled to 210 Euros a month in rental support if they earn less than 22,000 Euros a year.

Those affected have been sent a letter and SMS by the Ministry of Housing warming them that the regional authority will be in touch to clarify their circumstances.

In the meantime, the housing ministry has taken the precaution of suspending all monthly payment to young adults suspected of earning more than 22,000 Euros per annum.

No doubt some young adults will see their housing benefits cut off even though they are entitled to them.

But whilst the number of appraisals fell by just 4%, property values contained in those appraisals fell by an average of 17%.

Taken over 3 years, the number of property appraisals has fallen 41%, and valuations by 34%, giving us some idea of how far Spanish property values have fallen since the property bubble burst.

It is interesting to note that signs of a slow down first showed up in the valuations data as far back as 2006, falling significantly in 2007 and 2008, and showing signs of bottoming out in 2009.

The supply in Barcelona and Madrid of properties for sale under 200,000 Euros has exploded in the last year as vendors drop their prices, reveals new research from Spanish property portal Idealista.com.

Over 12 months to the end of July, the number of properties listed at Idealista.com with an asking prices of less than 200,000 Euros rose 55% in Madrid and 48% in Barcelona.

Since the peak of the boom in 2006, properties in the 100k to 200k Euros price bracket have gone from 8% of the total in Madrid, to 27% today, an increase of 458% since August 2006.

In Barcelona, they have gone from 3% of the total in October 2006 to 18% today, an increase of 638%.

The cause? The credit crunch and an over-supply of property forcing vendors to reduce their asking prices if they want to sell, according to Fernando Encinar, head of research at Idealista.com. “The only way out today for vendors is to realise they have to drop their prices if they want to sell,” Encinar told the Spanish press.

Average rental prices rose by 1% in July compared to last year, show the latest figures from the National Institute of Statistics (INE). This is surprising given the glut of property for sale and rent on the market.

Over 6 months annualised rental prices have gone up by between 0.9% and 1.2% per month, whilst house prices have gone down between 4% and 5%, meaning that rental yields are improving. Some good news at least for beleaguered property investors.

But consumer price inflation has risen by 1.9% in the same period, so although yields are rising, rental income in real terms is actually falling.

Rents went up the most in the Balearics (+1.5%), and down the most in Navarre (- 0.5%).