New property mini-bubble takes hold in Spain: "bubble is being caused by the end of tax deductions on property from 2011, and the 30% increase figure comes from comparing August 2010 with the same month last year.
The tax break will end at the end of the year for those who earn more than 24,100 € a year, and experts fear then the real estate market will come to a standstill.
Meanwhile House prices in Spain have fallen to their lowest level since 2005, with a 3.4% reduction for new property in the third quarter, compared to a year ago. The fall in price is the same as that seen in the second quarter. It comes as the banks are starting the release some of the properties they have repossessed onto the market, creating a growing supply.
Resale property now sells at an average price of 1,827.7 € per square metre, down 3.3% compared to a year ago.
However the biggest reductions in price have been seen along the coasts with the annual price changes down 20.2% in Málaga, 19.3% in Alicante, 15.9% in Murcia, and 15.7% in Almería. Prices also fell on the islands, Las Palmas down 15.4%, Islas Baleares down 15.35% and Santa Cruz de Tenerife down 15.2%.
A sign of the underlying problem is however shown by the increasing number of embargoes being served on properties in Spain, with close to 52,000 in the first quarter of the year, according to the General Council for Judicial Power."
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