Wednesday, June 3, 2009

The latest sign indicates Spanish recession may be finding a floor

Bank of Spain data revealed that the country's recession may be finding a floor as Spanish bad debt rose at the slowest rate in 15 months in March.

The volume of bad debt rose by 769 million euros ($1.04 billion) in March, the least since December 2007 and a fraction of monthly increases of up to 9 billion euros in the first months of 2009. The bad loans data mirrored recent indicators ranging from consumer confidence to house sales that fell at slower rates in past months, the Bank of Spain reported.

A small advance in the monthly number of new mortgages sold in March has prompted optimists to call the bottom of the Spanish property market. The rate of decline appeared to slow down compared to monthly falls of between 30% and 46% since November last year. Besides, the figures, from Spain's National Institute of Statistics (INE), showed that there were 52,439 residential mortgages signed in March, an increase of 1.2% on the number signed in February, which in turn was slightly better than January.

According to the latest house price analysis from Knight Frank, the Spanish property market isn't faring too badly compared to some other countries. Housing market in countries like Norway, Ireland, Denmark, Poland, Hong Kong, Estonia, UK, United States, Singapore, Dubai and Latvia had whopping annual decreases between 9% and 36% while Spain had a modest loss of nearly 7%.

The Knight Frank report has some reason for overseas investors in Spain to be cheerful. Despite a glut of unsold property hanging heavy in the Spanish housing market, a rising number of the industry analysts believe that the bottom of the market could soon be in sight as discounts start to attract international buyers.

Agencies such as Atlas International and Andalucian Dream Homes (ADH) are just few of the latest companies to offer their database price cuts of at least 30%. "We do feel that the market is bottoming out now as buyers are attracted by the large discounts on offer," said ADH's David Honeyman.