It's here: 2012, the year of sharp decline in housing prices
El año de la gran bajada de precios/The year of sharp decline in housing prices 
It's here: 2012, the year of sharp decline in housing prices
The banks' foreclosed properties are coming onto the market and owners will have to come down in price in order to compete
The banks' foreclosed properties are coming onto the market and owners will have to come down in price in order to compete
This will be the year of sharp decline in housing prices, according to Eduardo Molet, Real Estate Consultant for Spanish and foreign financial institutions and founder of 'Red Expertos Inmobiliarios'. There are several factors that will influence this great drop in prices.
One of them is the real estate sector's rules of very long cycles. Eduardo Molet explains this, "for over 10 years, apartment prices had been on a continuous rising trend, but in 2007, a new cycle began: first stagnation and then came the decline in prices that sector is currently immersed in. These long cycles show that it is difficult to predict when prices will hit rock-bottom, stagnate and begin again with another upward cycle. It is therefore expected that the decline in 2012 will continue to be very sharp".
It seemed that the market was recovering in the first months of 2011, but at the end of the year, GDP and unemployment and debt figures were disappointing. We then realised that we were not coming out of the crisis, and we actually took a step back and worsened. "The new government's measurements translated into cuts and tax increases. Forecasts by the Bank of Spain and the IMF confirmed that there will be no growth in Spain until at least 2014, which could signal the end of the cycle in the decline of housing prices", says Eduardo Molet.
The second factor that influences the sharp decline in housing prices in 2012 is the properties foreclosed by financial institutions going onto the market. "Commercial and savings banks are going to put their real estate onto the market because the change in government has not met the financial sector's expectations, which had hoped for strengthening measures", says Eduardo Molet.
Thus, financial institutions will have to permanently upgrade their accounts. According to Molet, "financial reform will force banks to update their balance sheets, and to do this, they have to dispose of their foreclosed real estate assets, something that can only be done with price reductions of at least 50% in the properties. Banco Sabadell, for example, has announced that it will sell the assets of CAM at this discount."
"The supply of cheap foreclosed assets will cause a significant drop in the prices of all properties on the market. Owners are now aware that they have no choice but to lower their prices by a significant percentage if they want to sell", adds Eduardo Molet.
This situation will drag down individuals who want to sell their homes and real estate professionals, who will be forced to compete in the market with commercial and savings banks and will therefore have to lower their prices. "We will have to make sacrifices in sale prices, but on a positive note, the number of sales transactions, which fell by 74% last year, will increase, and this is what the industry and the wider economy urgently need", says Eduardo Molet.
One of them is the real estate sector's rules of very long cycles. Eduardo Molet explains this, "for over 10 years, apartment prices had been on a continuous rising trend, but in 2007, a new cycle began: first stagnation and then came the decline in prices that sector is currently immersed in. These long cycles show that it is difficult to predict when prices will hit rock-bottom, stagnate and begin again with another upward cycle. It is therefore expected that the decline in 2012 will continue to be very sharp".
It seemed that the market was recovering in the first months of 2011, but at the end of the year, GDP and unemployment and debt figures were disappointing. We then realised that we were not coming out of the crisis, and we actually took a step back and worsened. "The new government's measurements translated into cuts and tax increases. Forecasts by the Bank of Spain and the IMF confirmed that there will be no growth in Spain until at least 2014, which could signal the end of the cycle in the decline of housing prices", says Eduardo Molet.
The second factor that influences the sharp decline in housing prices in 2012 is the properties foreclosed by financial institutions going onto the market. "Commercial and savings banks are going to put their real estate onto the market because the change in government has not met the financial sector's expectations, which had hoped for strengthening measures", says Eduardo Molet.
Thus, financial institutions will have to permanently upgrade their accounts. According to Molet, "financial reform will force banks to update their balance sheets, and to do this, they have to dispose of their foreclosed real estate assets, something that can only be done with price reductions of at least 50% in the properties. Banco Sabadell, for example, has announced that it will sell the assets of CAM at this discount."
"The supply of cheap foreclosed assets will cause a significant drop in the prices of all properties on the market. Owners are now aware that they have no choice but to lower their prices by a significant percentage if they want to sell", adds Eduardo Molet.
This situation will drag down individuals who want to sell their homes and real estate professionals, who will be forced to compete in the market with commercial and savings banks and will therefore have to lower their prices. "We will have to make sacrifices in sale prices, but on a positive note, the number of sales transactions, which fell by 74% last year, will increase, and this is what the industry and the wider economy urgently need", says Eduardo Molet.