The sales of residential property in Spain dropped radically during the second quarter of the year, compared to the same period in 2010.

Recent figures from Spain’s National Institute of Statistics showed a 40.8 per cent fall in the level of  Spanish property sales which is followed on from a 30.4 per cent decline in Q1 of 2011, compared to a year earlier, according to AFP report published on Expatica.  From April to June, 90,000 homes were sold and there are an estimated 1.5 million properties still on the market in the nation.

Global Property Guide stated that housing values declined by 8.43 per cent in the second quarter, compared to a year earlier. Besides, a quarter-on-quarter drop of 3.1 per cent was also recorded in the first quarter of 2011. The INE figures show that the price of both new properties and re-sales are falling, down 2.6% and 1.8% respectively year on year and prices are set to keep falling for another two years. Madrid was the only region to experience rising prices in Q3 2010, up by 0.9% compared to a year earlier. Andalucía saw prices fall by 2.2%, The Balearics 2% and the Canary Islands down 2.9%. The biggest fall was in Cantabria, down 6.7%.

According to figures from Idealista.com, one of Spain’s leading property portals, property owners are dropping their asking prices in record numbers as a record 26,188 vendors advertising their homes for sale at Idealista reduced their asking prices.

However, Property wire has reported that recovery in Spain’s commercial property market is currently ahead of the residential sector particularly Madrid is a hub of office activity, offering better than average occupancy rates.  Also, the luxury property market has shown more resilience than other sectors of the market. Overseas buyers are acquiring more luxury properties in Barcelona, the Costa Brava and Ibiza without mortgage financing. Lucas Fox International report on the first two quarters of 2011 also shows that there is a growth in Luxury property investment in Spain from Russian, Dutch, and Swiss buyers and investors.

Alex Vaughan, director of Lucas Fox has said that the first half of the 2011 has seen the luxury property market has held steady in sales prices and seen some increases in rental price for exclusive properties located in major cities. The lack of quality luxury apartments and properties should mean that prices in this segment of the market will remain stable.

He commented: “Given the current economic conditions and lack of finance available to local buyers, the luxury property market for foreign buyers has great potential and that there will be a return to annual capital growth next year. Demand for luxury properties continues apace, mainly driven by international clients from the Euro zone and more demand for sea front villas from buyers from Russia and ex Soviet states”.