House prices still too high for most Spaniards

MEETING the cost of buying a new home remains out of reach for most Spanish families. Market analysts point to the continuing high disparity between average income and house prices as a significant hurdle for recovery in the property sector.
The Ministry of Development has released figures confirming several other studies showing more than a sixth of property purchases last year were made by foreign buyers.
Moreover, more than 50 per cent of home buyers did not use a mortgage, pointing to the majority of residential property purchases being made by people with significant capital, investing in property at the point where it was believed prices had bottomed out.
Banco de España say that the average cost of a home is 6.3 times the average annual household disposable income. Another study by valuers Sociedad de Tasción (ST) puts the ratio at 7.8 times average income, although some analysts say the extreme differences in property prices from region to region in Spain have thrown out ST’s results.
In the cheapest areas to buy a home, which include Valencia and Murcia, the average price is six times average income. Meanwhile in the Balearics, houses are a toe-curling 15 times the average income.
Either way, experts agree that a healthy economy should see property prices equal to just four years’ average income, a ratio that is some way off in Spain’s still depressed jobs market.

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