CONTINUED easing in the decline of housing prices in the fourth quarter and of home sale transactions in November pointed to improvement in Spain's ailing housing market.

Spain's Housing Ministry said yesterday that its general index of housing prices fell 6.2% on the year in the fourth quarter after a 7.8% decline in the third quarter and an 8.2% fall in the second quarter.

The National Statistics Institute said home sale transactions fell 2.6% on the year in November after a 21% fall in October and a 17% decline in September. Sale transactions rose 5.3% in November from October. “The pickup in sales could mean buyer expectations are improving,” said Jose Garcia Montalvo, economics professor at Universitat Pompeu Fabra.

The global financial crisis precipitated the collapse of Spain's formerly buoyant housing market towards the end of 2008 after years of overbuilding and rapid price rises. The Housing Ministry data show prices have fallen 9.5% since their height in the first quarter of 2008.

But the ministry data are based on valuations of surveyors, and some industry associations say actual sale prices have fallen between 20% and 30%. Nonetheless, most analysts believe it will take time before a pickup in sales can absorb an estimated 1 million unsold homes and stimulate new building activity. “This is what actually creates jobs,“ Garcia Montalvo said.
Largely the result of a sharp decline in construction, the Spanish economy continued to contract in the third quarter, while the overall euro zone returned to growth.


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