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Spanish Believe that Property Price Drops Are Far from Over - 4 October 2010

Even though the Spanish economy has seen some promise of recovery, an overwhelming 83 percent of Spaniards believe that property prices will continue to fall in their country.

Results of a recent survey by Spanish developer Basico Homes show that 53 percent of Spain’s population is expecting home prices to drop slightly, while 30 percent expect a severe drop and 17 percent believe that prices will remain the same or slightly increase.

The outlook of the Spanish people seems to differ from that of its Prime Minister Jose Luis Rodriguez Zapatero, who recently announced that the country’s economy was on the mend.

Second quarter figures show that the economy grew 0.2 percent when compared to the previous quarter, but contracted 0.1 percent from the second quarter of last year; growth in the first quarter of 2010 was 0.1 percent, but had contracted 1.3 percent compared to the first quarter of 2009.

This flip-flopping doesn’t inspire much confidence among the Spanish or economists. But it does mean good news for property investors, as more and more distressed homes are appearing on the market. According to Royal Institution of Chartered Surveyors, the number of distressed or foreclosed properties has increased at a faster pace than it did last quarter, and with mortgage interest rates expected to rise, even more distressed homes should be up for grabs in coming months.

Spain also has an oversupply of newly developed holiday homes. As developers try to unload these projects, prices should drop further, creating even more property bargains in the country.

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