Spain housing prices fall 7.4 pct in long slump

 

Spanish house prices dropped 7.4% in the third quarter from a year ago, the fourteenth straight quarter of falls, as the property market remained submerged in a prolonged slump that threatens to undermine banks' solvency.

In the July to September period prices fell 2.8% quarter-on-quarter, the national statistics institute INE said on Thursday.

Spanish banks lent heavily to a property bubble that burst at the beginning of 2008 when the global finacial crisis put an end to easy mortgage credits.

Now the incoming centre-right government is considering ring-fencing toxic real estate assets at state level in order to improve solvency and increase confidence in Spain's financial sector.

House prices have dropped around 24% in real terms since their peak in 2007 and are expected to decline between 35 and 40% over a 10-year period, with demand hit by high unemployment and low population growth.