Tuesday 30 June 2009

2nd UPDATE: Spain 1Q House Prices -7.6% On Yr, -2.7% On 4Q

2nd UPDATE: Spain 1Q House Prices -7.6% On Yr, -2.7% On 4Q

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MADRID (Dow Jones)--Spanish housing prices posted a record decline in the first quarter, marking an accelerating collapse in a once-booming real-estate market that helped bring on one of Europe's deepest recessions.

Data from the Spain's National Statistics Institute, or INE, Tuesday showed that Spanish house prices fell at a 7.6% annual rate in the first quarter of 2009, compared with a 5.4% annual rate in the fourth quarter, and a 3% decline in the third quarter.

The yearly decline was the steepest in government records dating back to 1995.

First-quarter housing prices fell 2.7% from the quarter earlier.

Secondhand home prices fell 12.5% on the year, while prices for new houses dropped 2%.

The correction of Spain's formerly buoyant housing market is gathering pace even as the situation in other countries that have recently gone through boom-to-bust cycles shows signs of stabilizing.

The Nationwide Building Society of the U.K., for example, Tuesday said home prices in the U.K. rose at a 0.9% monthly rate in June after a 1.3% gain in May.

Most analysts expect prices to continue falling in Spain as builders try to unload a stock of an estimated 1 million unsold homes. At the same time, home sales are falling sharply.

Earlier this month, Banco Bilbao Vizcaya Argentaria SA, Spain's biggest mortgage lender, said it forecasts Spanish housing prices will fall 10% this year and 12% next year.

The sharp decline in Spain's labor-intensive home building sector has caused unemployment to soar and economic output to contract sharply.

Spanish first-quarter unemployment stood at 17.34%, while gross domestic product fell 1.9% from the previous quarter.

INE Web site: www.ine.es

-By Christopher Bjork and Jonathan House, Dow Jones Newswires; +34 91 395 81 23; christopher.bjork@dowjones.com

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(END) Dow Jones Newswires

June 30, 2009 12:32 ET (16:32 GMT)

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