The first quarter of 2012 has seen the prices of Spanish housing fall by an average of 3.4%, which in turn has reduced the standard cost per square meter by 2,013 Euros, according to local sources and statistics. With the close of the first quarter of 2012, all regions have seen a decrease in prices over the last 3 months.

The reasons why Spanish property prices have continued to fall is due to a few factors, with the main obstacle being the difficulty to obtain a Spanish mortgage. At the same time, there is a continual fluctuation in prices due to the fact that the government is forcing local banks and real estate agencies to adjust the property prices. This has caused the demand for property for sale in Spain to drop, allowing for a strong negotiating position for the buyer and bigger discounts on property prices. However, prices for Spanish property today are unthinkable compared to those of a few years ago, but until the obstacles for potential buyers is removed, sales may continue to drop.

The Balearic Islands have seen the biggest decrease in the prices of second-hand properties, which has been reduced by 5%. For Castilla La Mancha the decrease was 4.9% and 4% in Extremadura. Smaller regions such as Castilla León (-0.7%), Cantabria (-1.2%) and Rioja (-1.2%) saw lesser decreases.
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As far as the most expensive regions go, Euskadi (3,277 €/m²) is the only area that exceeds three thousand Euros per square meter, followed by Madrid (2,895 €/m²), Cantabria (2,306 €/m²) and Catalonia (2,259 €/m²). In respect to the cheapest areas per square meter, Extremadura (1,277 €/m²), Murcia (1,277 €/m²) and Castilla La Mancha (1,293 €/m²) offer the most economic options.

What is interesting is that both Madrid and Barcelona properties for sale hold far greater potential for prospective buyers, as both the cities hold major touristic and investment value that would far exceed other small regions of Spain. As the property market improves, these two regions will hold a far stronger value then the others.

Out of the 50 provinces in Spain, 48 saw a decrease in property prices during the first quarter of 2012, with only two provinces showing their prices have maintain and increased. Palencia and Guipúzcoa both experienced positive growth of 2.9% and 0.4%, respectively. On the other side of the scale, Ciudad Real (-7.4%) and Castellón (-5.1%) both feature the biggest decreases.

In respect to prices per square meter, the Basque provinces of Guipúzcoa and Vizcaya are the most expensive at 3,560 €/m² and 3,342 €/m² respectively. Again, Madrid comes in less at 2,895 €/m² with Álava at 2,533 €/m².

The same point can be raised with property in Barcelona being a far more attractive option for investors or second home owners. With a pre-approved mortgage or readily available cash, buyers can purchase properties that were far more expensive a few years ago.

The largest fall in property prices was recorded in Valencia (-4.1%) followed by Barcelona and Seville (-3% in both cases). Zaragoza and Madrid also experienced a downward trend in property prices, but only -1.8% for each, with Valladolid (-1.5%) and Bilbao (-1.3%) following behind.

Only five capitals managed to maintain a positive price increase, with Palencia (3.6%), Pontevedra (1.2%), Segovia (1.1%), Jaén (0.5%) and Logroño (0.1%) leading the way. On the other hand, Palma was hit hardest by the decline in prices, with property owners taking a 5.3% knock on their property sale price. Toledo followed with a decrease of 4.7% and Huesca with 4.6%.

How these figures regarding the Spanish capitals affect the buyer on the ground comes down to the price per square meter. San Sebastian has become the most expensive Spanish capital at 4,596 €/m², followed by Bilbao at 3,526 €/m² and Barcelona with 3,443 €/m². Madrid comes in at fourth with 3,416 €/m², while Lleida is the cheapest capital with 1,168 €/m².

With the uncertainty over the price fluctuation in Spanish property, serious buyers who do not need to rely on a Spanish mortgage, or have access to funds outside of Spain are presented with fantastic opportunities to invest into property, especially in Madrid and Barcelona property.

As the prices continue to decrease, together with the price per square meter, potential buyers can negotiate from a strong position, but it is essential that buyers are guided by a property professional. With the many opportunities on offer, possible pitfalls must be bypassed and understanding the property purchase process in Spain will aid in your investment.

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