June 9, 2020 / 12:29 PM / a month ago

Spanish property prices grow slowly but new-builds are booming

FILE PHOTO: A woman wearing a face mask walks past a Don Piso real estate agency office during the coronavirus disease (COVID-19) outbreak in El Masnou, north to Barcelona, Spain, May 19, 2020. REUTERS/ Albert Gea/File Photo

MADRID (Reuters) - Spanish property prices grew at their lowest rate for five years during the first quarter of 2020, the National Statistics Institute said on Tuesday, as the coronavirus outbreak dampened demand across the sector except for new-builds.

Spain’s property price index rose by 3.2% in the first quarter compared with the same period in 2019 - its lowest increase since 2015, when the country began a slow recovery from the deep economic crisis of 2008.

Second-hand property prices rose 2.7% year-on-year, also the smallest increase since 2015.

But prices for new-build properties, typically favoured by big investors, grew 6.1% year-on-year, up from 5.3% the previous quarter, suggesting demand among institutional buyers remained buoyant despite Spain’s stringent lockdown.

Measures to curb the coronavirus prevented individuals - who tend to buy second-hand homes - from visiting properties, taking out mortgages, and using public notaries.

Spain’s real estate market had already showed signs of a slowdown in late 2019, with prices dropping 1.3% year-on-year for the first time in three years, according to the country’s second-largest property portal, Fotocasa.

“The moderation in prices will continue during 2020 as a consequence of the domestic and global macroeconomic context,” said Fotocasa communications director Anais Lopez. “It’s possible we’ll see the first outright falls in property prices.”

Fotocasa’s price index for the first five months of this year showed falls ranging from 1.1% last month to 2.9% in March, when Spain declared a state of emergency which halted most activity.

Spain suffered one of the world’s worst coronavirus outbreaks, with over 241,000 cases and 27,000 deaths so far. The economy, which relies heavily on tourism and real estate, contracted 5.2% in the first quarter.

Reporting by Clara-Laeila Laudette; editing by Nathan Allen and Giles Elgood

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