NEWSDESK PALMA

AVERAGE residential property prices in Spain were 5% lower in January than they were a year ago and are now almost 20% below their peak values of 2007, according to the latest real estate index to be published.

The Tinsa index shows that Mediterranean coastal areas where foreigners tend to buy have done significantly worse than the national average, with prices down 8.4% year on year and 27.2% since their peak.

Second worst was capitals and major cities which saw average prices fall 6.5% year on year. But the Balearics and the Canaries have faired better, with prices falling 3.4% year on year and down 17.5% since the peak of the property market.

Below the average year on year decline was the Metropolitan Areas index with a fall of 4.1%, similar to that of December of 4.2%. While the Other Municipalities index, those not included in previous groups, fell of 2.7%, deteriorating faster than the 1.6% decline recorded in December.

Overall the accumulated decline from the top of the market is now 19.6%. Following the disappearance of various tax incentives on 31 December, which caused an unusual hiatus in values at the end of last year, prices are now readjusting to the new rules of the game in the market, Tinsa said.

The latest data from the country's National Statistics Institute also shows that the Balearic property market is performing better than the rest of ‘Spain, with positive growth of 18.4% on figures for the previous year.

MAJORCA

Some 9'698 properties were sold in the Balearics last year. Real estate agents and developers here in Majorca are expecting this growth trend to continue throughout 2011. “We have registered a marked increase in new clients and inquiries in the last three months, compared to last year at this time. Confidence seems to be growing and buyers who were waiting for the market to bottom out are now returning,” said Jan Pratt from Shortcuts Property Search, search agents with offices covering the Balearics and most of mainland Spain. “An influx of new properties for sale is expected from sellers who are encouraged by signs that the market has finally turned a corner,” she added.